CRA REFORM: Proposal to revamp the way the Community Reinvestment Act is applied to banks and thrifts. Regulators took a second shot at CRA reform with a plan published on Oct. 7; comments were due Nov. 21.

Fed and OCC officials have said the new rules will give banks the option of defining their community's credit needs, rather than relying on an examiner's assessment. Also, regulators have said that independently run small banks can qualify for a streamlined exam, even if their parent companies control more than $250 million in assets.

Rumors persist that the agencies will drop plans to require banks to report the race and gender of small business borrowers. The Justice Department has already nixed regulators' plans to apply enforcement measures to CRA violations. Action on a final rule is now expected in March, following congressional hearings, which are set for March 8 and 9.

SECTION 20: Last July the Fed proposed a plan to relax limits on banks with section 20 securities units. An alternative to the 10% revenue test would let banks calculate limits using assets or sales volumes or a combination of the two. Comments were due Sept. 9, and a final rule is expected within the next two months.

LOAN LIMITS: Comptroller Eugene A. Ludwig had been itching to relax limits on loans to one borrower, but the plan was delayed while a separate proposal to implement Financial Accounting Standard 115 was being completed.

The two are tied together by the definition of capital. Because lending limits are derived from capital, that rule could not be changed until the agencies figured out how FAS 115's unrealized gains and losses would affect Tier 1 capital.

The agencies decided on Nov. 8 to exclude changes in the value of these securities from Tier 1 capital, so the Comptroller's office can move ahead with lending limit changes at any time. The OCC expects to release a final rule this month.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.