The comptroller of the Currency is greatly expanding the universe of national banks that can make small business or farm loans without the documentation that ordinarily is required.

At President Clinton's urging, all the regulatory agencies decided in March to allow well-capitalized banks and thrifts with good managers - those with Camel ratings of 1 or 2 - to make a certain amount of small-business or agricultural loans that cannot be criticized by examiners if they lack the usual paperwork.

The so-called basket of no-documentation loans may not exceed 20% of a bank's total capital, and individual loans may not exceed $900,000.

The OCC went one step further last week and said 3-rated national banks that are improving may apply for the right to make these loans without worrying about documentation.

Adding 3-rated banks will extend the new policy to 95% of all national banks, said Susan Krause, the OCC's senior deputy comptroller for bank supervision policy. The OCC promises to respond to any 3-rated bank requesting the right to make these no-documentation loans within 30 days.

The other regulators are in agreement with OCC but have not moved to expand their programs yet.

Waiting for |Specifics'

The goal of the original proposal and OCC's expansion is to spur lending. OCC officials promised New England lawmakers in July that they would broaden the program because that region does not have many well-capitalized banks.

Allowing merely adequately capitalized banks to take advantage of the program may prod more banks to make more loans in hard-hit areas like New England. Then again, maybe not.

"I don't know of anyone in the state that is using it," said Gerald A. Little, president of the New Hampshire Bankers Association. "People are saying we're waiting for more specifics on how we should deal with it."

Mr. Little made clear that his members appreciate the president's concerns and the regulators' efforts. But he said banks in New England "have been through regulatory hell in the last year, and are averse to adding much risk to their balance sheets right now."

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