WASHINGTON - Consumer activist Ralph Nader blasted proposals to exempt small banks from the Community Reinvestment Act, arguing that many of these institutions do little lending in their communities.

According to a study of June 1994 call report data released Monday by the Nader-founded group Essential Information, 725 community banks put less than 35% of their deposits into loans.

"Clearly, these banks have significantly abandoned their communities and charters and are using federal deposit insurance funds to attract deposits for investments in debt securities and the federal funds market," Mr. Nader said.

Ron Ence, director of legislative affairs for the Independent Bankers Association of America, had another interpretation for the data.

"It's not that they are not anxious to extend credit in their communities," he said of banks with low loan to deposit ratios. "It's just that the demand is not there."

The Nader report comes just days before a key House Banking subcommittee meets to begin work on regulatory relief legislation. The financial institutions panel is scheduled to begin voting on the bill Wednesday.

The average loan-to-deposit ratio for the nation's 9,499 community banks - commercial banks with assets of $250 million or less, by Mr. Nader's yardstick - was 62% in June 1994, according to the study.

Two regulatory relief bills now before Congress would exempt these banks from most or all requirements of the Community Reinvestment Act.

The co-sponsor of one of the bills, Sen. Richard Shelby, R-Ala., said during Senate hearings last month that "the small community bank, by its very nature, must meet the credit needs of its community to survive."

But hundreds of small banks are able to survive and thrive by operating "like a money market fund almost," said Jonathan Brown, director of financial research for Essential Information and author of the study released Monday.

Community banks with low loan-to-deposit ratios held 22.54% of their assets in U.S. Treasury securities, 15.37% in government agency securities, and 17.96% in mortage-backed securities issued or granted by U.S. government agencies, according to the study.

First National Bank of Ottawa (Kan.) made Mr. Brown's list with a loan- deposit ratio of 27.31%.

"We make as many loans as we can," said bank president Jim Chandler. But Ottawa, a town of 11,000 "is a very competitive environment." Mr. Chandler said CRA examiners have agreed with this assessment and given his bank satisfactory ratings.

Mr. Brown said the 35% loan-to-deposit standard he used was arbitrary but conservative. "Our presumption is that those at less than 50% are not serving their communities," he said.

Mr. Nader said he found it puzzling that the Clinton administration, which opposes exempting small banks from the CRA, had not already used the loan-to-deposit ratio data to make its case.

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