WASHINGTON -- Bank regulators are considering a test of their proposed community reinvestment rules at institutions throughout the country before finalizing a new plan.

If they decide to go ahead with the effort, release of the new regulations would be delayed even longer than expected.

"There is definite interest in trying to do some evaluation of what any new rule would indicate in an examination," said Stephen Cross, the comptroller of the currency's deputy for compliance management. "As we consider that, we recognize our testing would probably delay implementation of the final rules."

Consideration of more thorough testing of how their proposal would work in practice comes as the agencies are reviewing thousands of comment letters on the Community Reinvestment Act. Industry criticism of the plan has been vast.

One of the biggest complaints from lenders is that the plan would be unworkable. Not only would it be complex to carry out, they have argued, but it would create so many anomalies that its results would be irrelevant in many cases.

While regulators have tested various parts of the proposal, they have not tested the entire plan on a systematic basis.

Effort to Meet Deadlines

Throughout the yearlong effort to reform CRA, regulators have struggled to meet ambitious deadlines without jeopardizing the quality of the reform. When asking them to reform the plan last July, President Clinton requested that the rules be put into effect by January 1994.

Comptroller of the Currency Eugene Ludwig has pushed hard for the agencies to complete the effort as quickly as possible. He has resisted calls for the agencies to develop a second proposal.

But others -- including Fed Governor Lawrence B. Lindsey -- have argued for a go-slow approach to give the industry time to comment on another proposal before the rules are completed.

"We want to put out a regulation that works," Mr. Lindsey said at a press conference last week. "I don't think we do anyone any service by putting out one that doesn't. If that takes us a little bit longer, then so be it."

The agencies are at least several months away from releasing anything new, either a second proposal or a final rule.

When the CRA proposal was released last year, officials at the Office of the Comptroller of the Currency said they would test it at a number of large banks during the comment period. But that plan was abandoned as it became apparent that the proposal was likely to change considerably.

A Few Small Banks Evaluated

Nonetheless, national bank examiners have evaluated "a handful" of small banks under the streamlined examination proposal, Mr. Cross said. Ratings were compared with those under the current rules.

"For the most part, the assessments were coming out at about the same level," Mr. Cross said.

In addition, Fed officials have studied the proposed market share test using existing Home Mortgage Disclosure Act data. They have found that in many cases, the results are not particularly meaningful.

For example, the market shares of many lenders in poorer areas are higher than those in wealthier areas, which under the new rules would help boost a CRA rating. But often that results not from strong community outreach in poorer areas, but rather from less nonbank competition there.

"It shows some of the problems with the use of market share," said Griffith Garwood, the Fed's top compliance officer.

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