When a bank receives a "needs-to-improve" Community Reinvestment Act rating, the initial response by senior management is often, "Why aren't our loan officers doing more to generate loans in low-income and moderate-income neighborhoods and to minorities?"

The reality too often is that no one stops to assess whether the loan officer has been given the proper training to respond to an increasingly more diverse customer base.

Banks are notorious for having well-defined, in-house compliance training that advises loan officers of all applicable regulatory requirements.

However, when it comes to compliance with the CRA and fair lending compliance training, there is often an important missing link.

That is, how loan officers should respond to a customer base that is significantly more diverse than it was 10 years ago and will become more diverse by the year 2000.

Better Training Sought

Recognizing this missing link in their compliance training, some banks have rushed out and hired consulting firms to conduct in-house diversity training programs.

While these programs are often good, they are typically generic and 90% are conducted by firms that have very little understanding of the uniqueness of the banking industry, nor do they understand the principles of lending.

Recently, I spoke to a group of loan officers who commented that they would like to see more training that specifically adresses how to provide practical, realistic and proactive approaches to lending to a customer base that is quickly becoming more diverse.

They also felt that this training should be taught by someone who has either been a loan officer or at a minimum has worked in a bank.

Customizing Programs

My advice to banks that are developing in-house CRA and fair lending compliance training is to customize a portion of the training for those involved specifically in the lending process.

In addition, case studies that relate and respond to the loan officer's need to comply with the Community Reinvestment Act and fair lending when interacting with diverse customers is essential.

Training programs should include such topics as:

* Understanding the challenges and rewards of lending to a diverse population

* Understanding fair lending even beyond regulations

* What it takes to acquire and retain minority customers and low-to-moderate income customers.

* Working through stereotypes and biases as a loan officer.

* How to increase market share and bottom-line profits through diverse customer base.

* Working through barriers that get in the way of making sound lending decisons.

Banks' Responsibility

Most loan officers want to do a good job. However, banks must make sure they adequately train their personnel to meet the needs of all their customers.

It is only through broadening the training programs that address specific needs of loan officers that banks will be able to address on-going compliance with CRA and fair lending, and merit the reputation all customers are treated fairly in their institution.

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