Just 13 months after the latest Community Reinvestment Act revisions took effect, Office of Thrift Supervision Director Ellen S. Seidman is pushing to overhaul the rules again.

Though the new CRA procedures are not scheduled to be reviewed by banking agencies until 2002, Ms. Seidman said Internet banking and the explosion of insurance company-owned thrifts have already made the rules obsolete.

"I think we're going to have to start taking a look a little sooner, because the world really is changing," she said in an interview Monday.

Regulators must have more flexibility to expand bank assessment areas beyond the communities surrounding their branches, she said.

"A lender's assessment base may be the Denver area, but the need for lending may be in some far-gone corner of the state where a financial institution hasn't been seen in years," she said.

Also, many small and midsize institutions are finding it difficult to compete against huge mortgage companies for low-income borrowers, she said. Rather than penalize these banks, the government should let them earn full CRA credit if they provide checking and savings accounts in low-income communities.

"We should allow small institutions that find it difficult to compete on price with Countrywide Credit and the big banks for the best of the low- income loans to get more credit for actually being in those communities offering banking services," she said.

Ms. Seidman also wants regulators to make CRA strategic plans more viable by letting institutions submit plans that are of less than five years in duration. Banks meeting strategic plans approved by regulators are not required to undergo the traditional lending, investment, and service tests.

The strategic plan option was intended to ease compliance burdens of large institutions and should be used by insurance companies and other nonbank conglomerates that have applied for unitary thrift charters, she said. But few of these institutions are willing to make such a long-term commitment, she said.

Officials at other banking agencies declined to comment openly on Ms. Seidman's remarks. Privately, however, they said it would be unfair to change the rules just as banks were adapting to the latest revisions. Instead, they prefer to work out compliance difficulties on a case-by-case basis with individual institutions.

Industry officials expressed mixed feelings about a new CRA rewrite.

"Even if the impetus is making CRA more flexible for banks, the industry might have some misgivings," said Jo Ann S. Barefoot, a partner at KPMG Barefoot Marrinan in Columbus, Ohio. "It's good to debate these issues, but the industry should know what options make sense before opening this up to massive change."

Warren W. Traiger, who advises banks on CRA issues for law firm Butler, Fitzgerald, Potter, said regulators should reexamine the rules now.

"Regulators ought to get it right, and there's no reason to live under the existing system simply because it's a new one," he said. "The notion that a bank should concentrate on serving the community that surrounds its brick-and-mortar branches is almost quaint in these days of telephone and Internet banking."

Ms. Seidman's proposal picked up some support from community activists.

Helen Dunlap, president of the National Low-Income Housing Coalition, said banks should be given more incentive to increase services in poor neighborhoods.

"There's been a lot of attention on building credit accessibility to these communities," she said, "but we have not spent much time on the retail side. I think we should."

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