WASHINGTON - Bucking up an audience worried that the Community Reinvestment Act will be repealed, Hugh L. McColl said banks must continue to make these loans no matter what the rules are.

In a speech at a NationsBank-sponsored conference here last week, the North Carolina superregional's chairman said banks should make CRA loans because they are good business.

While his position is not new, Mr. McColl's words reassured community development experts who are concerned the CRA may be torpedoed by the new Republican Congress.

Mr. McColl's answer: Don't worry about it.

Banks should not make CRA loans because the government is forcing them, or because of "some sense of do-goodism," but because sound loans make money, he said.

"The business of building better communities is not sustainable if it is driven by compliance requirements," Mr. McColl said.

Mr. McColl also said that because government is now likely to get smaller, banks and other private businesses will take on more responsibility.

"With the shift toward less government and more local responsibility, the success of our communities will rest more heavily than ever before on all of our shoulders," Mr. McColl said.

Mr. McColl also criticized the government for changing affirmative action from a useful principle to a regulatory requirement.

Like CRA, Congress has targeted that law for overhaul, or possibly, repeal.

"(Affirmative action) opponents claim that it has fulfilled its mission, and should be abandoned - I disagree," Mr. McColl said.

But, he said, he is encouraged to see an upsurge in voluntary diversity programs.

"Businesses understand they must have a more diverse employee base to serve today's diverse customer base," Mr. McColl said.

He did compliment the government on a shift in emphasis from process to results in analysis of Home Mortgage Disclosure Act data.

When banks generate more loan applications in certain communities, both loan acceptances and denials increase, Mr. McColl said. But, he said, critics have highlighted the denials.

"Bankers grew more frustrated and the data grew more flawed," Mr. McColl said. Now, the emphasis is on the actual loans, he said.

The conference, which ran through Sunday, brought 400 community leaders - activists, church officials, and mayors - together to discuss the changing environment of community development. Pending CRA reform gave the meeting a sense of urgency.

John Taylor, president of the National Community Reinvestment Coalition - co-sponsor of the meeting - said the attacks on CRA and affirmative action are serious.

"We are about to have this all undone," Mr. Taylor warned.

In a panel discussion on community development strategies, Mr. Taylor criticized activists for not communicating their goals well.

"It amazes me how many people don't understand what we do," Mr. Taylor said.

When people do understand, he said, community reinvestment is something they want to get involved in.

"We're not talking about the supercollider here, we're talking about economic development," Mr. Taylor said.

Charles M. Kamasaki, senior vice president of the National Council of La Raza, a Hispanic advocacy group, echoed Mr. McColl's comments that reinvestment should not be driven by compliance concerns.

"Use CRA as a tool, but a tool to an end that has a larger goal," Mr. Kamasaki said.

In a suggestion that drew a round of applause, Mr. Kamasaki said those involved in development need to start looking at income diversity as well as ethnic diversity.

Rather than focusing so narrowly on low-income borrowers, banks must targets people of all income levels, according to Mr. Kamasaki.

"We've almost made moderate-income people the enemy," he said.

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