WASHINGTON -- Speculation is growing that regulators will be unable to fulfill President Clinton's request that the Community Reinvestment Act be revamped by yearend.

Many observers say it will be equally difficult for the agencies to meet Comptroller of the Currency Eugene Ludwig's goal of putting a proposal out for public comment by Oct. 29.

While regulators have worked feverishly during the last 11 weeks on the reform -- traveling to seven cities across the country to hear from lenders and community groups about how to change the law -- they have yet to come up with a draft for inter-agency review.

The prime movers of the reform -- Mr. Ludwig, Federal Reserve Governor Lawrence Lindsey. Federal Deposit Insurance Corp. acting Chairman Andrew Hove, and Office of Thrift Supervision acting Director Jonathan Fiechter -- have reached some agreement on the general principles of reform, sources say, but the four have yet to agree on the specifies of any one plan.

October Target for Proposal

Mr. Ludwig says he still wants to have a proposal out for public comment by the end of October, and to announce a final plan by yearend. Publicly, the agencies say they are still shooting for those goals.

"That's an ambitious deadline but we're working under a mandate from the President," said Stephen Cross, deputy comptroller for compliance. "But my suspicion is if the comptroller and the other principals find it can't be done by then with a product they're comfortable with, it won't be done."

Privately, some regulators say their task is herculean, and unlikely to be accomplished on time. Once the agencies agree informally on a draft proposal, it has to go through formal review by the Federal Reserve, Treasury Department, and Office of Management and Budget, before the agencies can publish the proposal in the Federal Register.

Some have suggested that a more realistic goal would be having a proposal -- but not the final plan -- done by Jan. 1. As long as they have a document out for public review by then, the theory goes, the agencies could still say they have met the President's deadline.

Community groups and industry leaders say they would rather see the regulators miss the deadline, and take more time to come up with a sound plan. They are also worried the public will not have enough time to digest the plan and respond to it.

Some community groups have even petitioned the White House to push back the deadline.

"I don't want to prejudge the quality of what they've proposed," said John Taylor, executive director of the National Community Reinvestment Coalition, "But we do want to have enough time to be able to comment on it."

|Strategic Plan' Approach

Regulators are still considering a 'strategic plan" approach, by which lenders -- after consulting with community groups -- would submit a CRA plan to regulators for approval. Each year, examiners would judge the lenders' performance on how well the plan's goals were met.

Some lenders are concerned that community groups could be given too much power under this approach, if lenders had to have the plan endorsed by these groups.

The regulators could let lenders choose between this option and one that looks more like the current CRA rules but adds assessment factors that focus more on lending.

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