New Jersey banks aren't getting enough credit for their low-income lending, says the state's top banking official.

Jeff Connor, commissioner of New Jersey's banking department, told Garden State bankers last week that community reinvestment, laws should be amended to give CRA credit for loans made to low-income people outside the bank's delineated market area.

The issue is of special concern to New Jersey, a state with large patches of urban sprawl. Banks located in the shadow of an urban area they have not identified as a market are discouraged from making loans there because they won't get CRA credit. Mr Connor said.

Under current law, banks gets CRA credit only for loans made in their narrowly defined market area. Mr Connor believes that changing the law will encourage banks to step up lending to low-income people and small businesses.

The recommendation is one of several contained in a report issued last week by a statewide credit crunch task force convened by Mr. Connor. It was made up of bankers and small-business owners.

The report also recommends consilidating federal regulatory agencies and creating legislation that will exempt banks with good low-income lending records for certain risk-based capital requirements.

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