WASHINGTON -- Minority-owned financial institutions a being unfairly downgraded in Community Reinvestment A examinations, and legislation may be needed to correct the situation, said Rep. Floyd Flake, D-N.Y.

"I find it very disturbing that banks can get unsatisfactory ratings when they serve only those segments of the community that the Community Reinvestment Act intended to help," said Rep. Flake, a New York Democrat and chairman of the House Banking subcommittee on general oversight.

Insufficient Outreach Efforts Cited

Rep. Flake said some minority institutions are being downgraded for not making enough effort at community outreach. But he argued that such efforts may not be necessary for minority-owned institutions based in the inner city.

However, John F. Robinson, acting deputy director for Washington operations at the Office of Thrift Supervision, said some of the institutions being downgraded may not be serving their entire community.

"It appears that CRA contemplated that minority institutions should serve all the minorities in a community, not just one ethnic group," he said during a hearing.

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