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Federal R eserve B ank
OF DALLAS
W ILLIA M

H. WALLACE

f i r s t v ic e p r e s id e n t
AND C H IE F O PER ATING O FFIC ER

DALLAS, TEXAS 75222

_

April 18, 1989

Circular 89-25

TO:

The Chief Executive Officer of Banks
and Bank Holding Companies in the
Eleventh Federal Reserve District
SUBJECT
J o i n t P o l i c y Statem ent on Community Reinvestment Act
DETAILS

On March 21, 1989, a revised joint policy statement on the Community
Reinvestment Act was issued by the Federal Reserve, FDIC, Comptroller of the
Currency and Federal Home Loan Bank System.
The revised policy statement endeavors to clarify federal
authorities' CRA expectations beyond those found in the law itself
implementing regulation (such as Federal Reserve Regulation BB).
statement describes the characteristics of CRA programs which have
been regarded as highly effective.
It recommends the adoption of
procedural and documentational enhancements.
Since effective CRA programs span a number
a bank or bank holding company (e.g. commercial and
marketing and business development, administration,
compliance), we recommend broad circulation of this
y our officers and directors.

banking
or other
The
generally
related

of functional areas within
consumer lending,
public relations, and
policy statement among

Later this Spring, we plan to host a series of informational
briefings on the new CRA policy statement.
If you would like to receive a
copy of the briefing schedule and a personal invitation to attend, please
contact the Community Affairs Office, Federal Reserve Bank of Dallas, Station
K, Dallas, Texas
75222, (214) 744-7341.
ATTACHM
ENTS

A copy of the policy statement is attached, together with the joint
press release communicating a summary of the statement's purpose and
provisions.

For additio nal copies of any circular please contact the Public A ffairs Dep artm en t at (214) 6 51 -6 2 8 9 . Banks and others are
e ncouraged to use the following in coming W A TS numbers in c ontacting this Bank (800) 4 4 2 -7 1 4 0 (intrastate) and (800)
5 2 7 -9 2 0 0 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

-

2

-

MORE INFORMATION
For further information on the policy statement, please contact
A n dr e w W. Hogwood, Jr., Assistant Vice President and Community Affairs Officer
(214) 744-7341 or Basil J. Asaro, Assistant Vice President, Supervision and
Regulation (214) 698-4345.
For additional copies of the statement please
contact the Dallas Fed's Public Affairs Department at (214) 651-6289.
Sincerely yours,

Joint News Release

Federal Reserve Board
Comptroller of the Currency_________
Federal Home Loan Bank Board_____
Federal Deposit Insurance Corporation

For immediate release

March 2 - 1989
1,

The Federal Reserve Board, the Office of the Comptroller of the Currency,
the Federal Home Loan Bank Board, and the Federal Deposit Insurance Corporation
("the Agencies") today jointly issued a Community Reinvestment Act (CRA)
Statement.

This Joint Statement revises the 1980 CRA Information Statement

issued by the Agencies and reflects the experience of the Agencies since 1977 in
administering the CRA.
The Statement is designed to provide federally insured financial
institutions and the public with guidance regarding the requirements of the CRA
and the policies and procedures the Agencies will apply during the applications
process.
The Statement discusses:
•

thebasic components of

an effective CRA policy;

•

the role of examination reports on CRA performance
in reviewing applications;

•

the needfor periodic review and documentation by
financial institutions of their CRA performance;
and

•

the role of commitments

to the Agencies in the

applications process.
(Over)

The Statement strongly encourages financial institutions to expand the CRA
statements that are presently required to include information regarding the
institution's past record of meeting its obligations under the CRA.

The

Statement indicates that these expanded statements could form the basis for
useful comment by and discussions with community groups regarding the
institution's record well before an application is filed, at a time when any
issues or problems can be more effectively addressed.
The Statement also discusses the role of private meetings between financial
institutions and community groups in the applications process, the policy of the
Agencies regarding private CRA agreements, and the views of the Agencies
regarding extensions of the public comment period for applications.
Examples are provided in the Statement of specific steps that have been
taken by institutions with effective programs for meeting their CRA
responsibilities.
The Joint Statement of the Agencies is attached.
-

Attachment

0

-

STATEMENT OF THE FEDERAL FINANCIAL SUPERVISORY AGENCIES
REGARDING THE COMMUNITY REINVESTMENT ACT

INTRODUCTION
In

light

of

the

significant

developments

that

have

occurred in the financial institutions industry since enactment
of the Community Reinvestment Act of 1977 ("CRA"),
Governors

of the Federal Reserve System,

Insurance Corporation,
Currency,

and

Agencies")

the

have

the Office

Federal

revised

Information Statement.

Home

the
The

of

the Board of

the Federal Deposit

the Comptroller

Loan

Bank

Board

of

the

("the

1980 Community Reinvestment Act
revisions

in this Joint Statement

are intended to take advantage of the experience the Agencies,
financial
the

years

institutions,
in

requirements

and community members have gained over

developing
and purposes

approaches
of

to

ensure

the CRA are met.

that
This

the
revised

Statement provides guidance regarding the types of policies and
procedures

that

the

Agencies

believe

financial

institutions

should have in place in order to fulfill their responsibilities
under

the

CRA

on

an

ongoing

basis

and

the

procedures

the

Agencies will use during the application process to review an
institution's CRA compliance and performance.

-

Under

the

CRA,

the

2

-

Agencies

considering certain applications
financial

institution

are

required,

when

involving a federally insured

("financial

institution"),

to take into

account the institution's record of helping to meet the credit
needs

of

its

entire

community,

moderate-income neighborhoods.
Agencies want

to

assure that

including

Given this
potential

low-

and

responsibility,

applicants,

the

and those

who may wish to comment on an applicant's CRA record, know what
is expected of

a financial

institution under

the CRA and of

participants during the application process.
The
this

Agencies

Statement

comment

on

will

believe

help

applications

necessary to permit

the

clarification

applicants

and others who wish

to provide

the Agencies

provided

promptly

the

to address CRA

in
to

information
issues

in a

timely fashion in accordance with the schedules required under
relevant

federal

statutes

to emphasize their belief
accomplished

when

responsibilities
management
expect

and

and regulations.

that the goals of the CRA are best

financial
under

the

institutions
statute

operational

applicants

to

have

The Agencies wish

make

a part

structure.
addressed

of

Thus,
their

meeting
their
the

their

routine
Agencies

responsibilities

under the CRA well before they submit an application.

BACKGROUND
The
concern

CRA was

over

unfair

enacted
treatment

in
of

1977

against

prospective

a backdrop

of

borrowers

by

3

-

financial

institutions

differences

in their

reaffirmed

that

and

-

over

unwarranted

lending patterns.

every financial

geographic

In the CRA,

institution has

Congress

a continuing

and affirmative obligation consistent with its safe and sound
operation

to

help

community,

including low- and moderate-income neighborhoods.

The CRA
federal

meet

the

states

credit

that

its

needs

purpose

of

its

is to

entire

require each

financial supervisory agency to use its authority when

conducting examinations to encourage the financial institutions
it

supervises

to

help meet

those

needs.

To

this

end,

the

Community Reinvestment Act provides:
In connection with its examination of a financial
institution, the appropriate . . . agency shall(1)

assess the institution’s record of meeting the
credit needs of its entire community, including
lowand
moderate-income
neighborhoods,
consistent with the safe and sound operation of
[the] institution; and

(2)

take such record into account in its evaluation
of an application . . .
by such institution.
12 U.S.C. § 2903.

Simply
regulations
wholesale

stated,

place
or

upon

retail,

responsibility

to

the
all

CRA

financial

urban

treat

and

the

or

an

needs

moderate-income members of their communities
other market

for services

serve.

with

As

any

that

other

implementing

institutions,

rural,

credit

the

whether

affirmative
of

low-

and

as they would any

the institution has decided to
targeted

market,

financial

4

-

institutions

are

expected

to

-

ascertain

credit

needs

and

demonstrate their response to those needs.
The Agencies
institutions
communities

to
in

institution's
consistent

help

assessment

purposes,
was

not

the

the

the CRA

credit

ongoing

of

safe

that

its
and

intends

needs

way

that

relevant
sound

of

financial
their

recognizes

market

operation

and
of

the
is

the

This responsibility under the CRA may be met in a

variety of ways,
education,

meet

a positive,

with

institution.

believe

including

consumer,

home

lending

for business,

purchase,

and

home

agriculture,
improvement

and to finance state and local governments.
intended

to

limit

an

institution's

The CRA

discretion

to

develop the types of products and services that it believes are
best suited to its expertise and business objectives and to the
needs of its particular community,

as long as the institution's

program is consistent with the objectives of the CRA.

Nor is

it the purpose of this Statement to establish specific

lending

requirements or programs for financial

institutions

subject to

the CRA.
This

Statement

provides

guidance,

in

part,

by

describing the types of activities that the Agencies have found
fulfill
CRA.

a financial

Because

the

institution’s responsibilities

needs

of

communities

vary,

the

under

the

Agencies

recognize that the examples outlined in this Statement will not
be appropriate for every institution or for every community.

5

-

-

GUIDELINES FOR DEVELOPING AN EFFECTIVE CRA PROCESS
Because
differ,

the

credit

the Agencies

financial

will

institution

determines

its

needs

consider

defines

credit

appropriate

process

community

including

communities
by which

it

its

a

serves,

low-

and

and takes steps to help meet those needs

through appropriate and prudent
that

individual

the

the

needs,

moderate-income areas,

of

lending.

consideration

should

The Agencies believe
be

given

to

an

institution that makes ongoing efforts to ascertain the needs
of

its entire community,

develops

are responsive to those needs,
services

throughout

the

products

community.

An

most

that

active

policy oversight,

to

assure

that

and markets those products

management involvement,
likely

and services

the

program

and

of

and regular review is

products

and

services

the

institution chooses to offer will meet community credit needs,
be adjusted when those needs change,

and be available to all

segments of the community.
The
effective

experience

CRA

of

process

the

must

Agencies

include

indicates

methods

to

that

an

ascertain

community needs on an ongoing basis through outreach efforts to
local

governments,

organizations.
system

that

businesses,

This

both

and

ascertainment

facilitates

community
effort

dialogue with

members

should
these

and

include

a

individuals

and groups and enables them to communicate their concerns to an
officer

of

the

responsibilities.
methods

to

financial
To

institution

be effective,

incorporate

findings

with

CRA

the process must

regarding

community

include
credit

6

-

needs

into the development

-

of products

and services

that the

institution decides to offer to help meet these needs.
The CRA plan should include marketing and advertising
programs for lending products and services that are responsive
to

the

needs

stimulate

of

awareness

the community,

loan

community

and

that

of those products

including

plan should also
of

the

will

inform

and

and services throughout

low- and moderate-income

areas.

The

include periodic analysis of the disposition

applications

to

ensure

that

potential

borrowers

are

treated in a fair and non-discriminatory manner.
The duty

to coordinate

and monitor

the CRA process

should be assigned to a senior officer or a committee charged
with the responsibility to report periodically to the board of
directors

about the institution’s CRA efforts,

areas for improvement, where appropriate.
program

should

be

established.

This

performance and

An employee training

program

should

contain

information about those policies of the institution designed to
help

meet

low- and

community

moderate-income

Procedures

should

maintained,
receiving

credit

be

needs,
areas

implemented

including
and
to

the

small
assure

and for reviewing

of

businesses.
that

as required by agency regulations,

public comments

needs

files

are

for purposes of

and responding

to

these comments.
Regardless
implement

such

of how an institution organizes

a plan,

seeing

that

the steps necessary to help meet

itself

the institution has

to

taken

its community's credit needs

7

-

is

the

with

responsibility

of

the

its board of directors

-

entire organization,
and continuing

beginning

through

its

line

management.
Once

a

financial

effective CRA process,
accurately
that

reflects

institution

it must

the

types

assure that
of

lending

it will offer to the community.

reviewed

at

services

least

that

annually

the

to

institution

clearly articulated,

has

established

its CRA statement

and other

services

This statement must be

ensure

its

chooses

to

accuracy.
offer

The

should

be

reasonably related to community needs,

distributed in a fair

and nondiscriminatory manner

with

general

an

an

institution's

approach

to

its

and

in keeping

business.

A

financial institution need not offer every financial service in
order

to meet

its CRA responsibilities;

however,

the Agencies

expect that institutions will offer the types of credit listed
in their CRA statement throughout their delineated communities.

SPECIFIC ELEMENTS OF AN EFFECTIVE CRA PROCESS
Within
institutions

the

have

general

substantial

framework

discussed

leeway

developing

in

above,
specific

policies and programs to meet their CRA responsibilities.
actual
upon

steps taken by an institution will of necessity depend
a

number

institution,
size,

The

of

its

factors,

business

including

strategy

and

the

size

of

objectives,

nature and needs of the community involved.

the specific steps taken by a small rural

the
and

the

For example,

institution to meet

-

its

CRA

responsibilities

may

8

be

-

quite

different

from those

required of a major metropolitan institution.
Based

upon

the

experience

of

the

Agencies,

institutions with the most effective programs for meeting their
CRA responsibilities and for assuring that their services reach
low-

and moderate-income

segments of

the community will

have

taken many of the following steps:
-

implemented policies, including the use of more flexible
lending criteria, consistent with safe and sound
practices, to provide the types of loans and services
described in the institution's CRA statement on a more
widespread basis;

-

increased efforts to make loans to help meet identified
credit needs within the community, such as those for
home mortgages, home improvement and small business.
This
may
include
participation
in
various
government-insured lending programs, such as FHA-insured
or VA-guaranteed mortgage loans and SBA loans, and
participation in other types of lending programs, such
as high-loan-to-value-ratio conventional mortgage loans
with private mortgage insurance;

-

implemented and advertised the availability of services
of benefit to low- and moderate-income persons, such as
cashing government checks or offering low-cost checking
accounts;

-

created and implemented advertising and marketing
efforts
through,
for example,
newspapers,
radio,
television and brochures designed to inform low- and
moderate-income groups (in languages other than English,
where appropriate) of available loan and deposit
services;

-

expanded officer call programs to include targeted
groups, such as small business owners and real estate
agents in low- and moderate-income neighborhoods, in
order to inform them of available credit services;

-

established a process involving all levels of management
in efforts to contact governmental leaders, economic
development practitioners,
businesses and business

9

-

-

associations, and community organizations to discuss the
financial services that are needed by the community;
-

developed systems to provide assistance to customers or
potential customers regarding federal, state or local
assistance programs to small businesses, or for housing
or other similar community needs;

-

adopted a written corporate policy concerning branch
closings which contains provisions for appropriate
notice, analysis of the impact of the closing on the
local community, and efforts that may be made to
minimize any adverse effects;

-

participated in or provided assistance to community
development programs or projects, such as Neighborhood
Housing Services programs, small business programs
encouraged by the Small Business Administration or
Economic Development Administration,
or Community
Development Block Grant programs;

-

established a community development corporation;

-

funded
a small business investment
corporation or
created a minority small business investment corporation;

-

made lines of credit and other financing available,
within
prudent lending principles,
to non-profit
developers of low-income housing and small business
developments, for low-income multi-family rehabilitation
and new construction projects, and/or provided a
secondary market for non-profit developer paper;

-

underwritten or

-

in the
case of members of the Federal Home Loan Bank
System, participated actively in the FHLBB Community
Investment Fund program.
Finally,

invested in state and municipal bonds; or

to enhance

CRA

performance,

some

financial

institutions have chosen to establish special or pilot
programs earmarked for
consistent
Agencies
is

with

support

properly

safe

low- and moderate-income neighborhoods,

and sound

such activity,

addressed

lending

by

the

lending practices.

While

the

the scope of any such program
financial

institution

itself,

10

-

taking

into

account

capabilities.

This

its

own

-

expertise

and

financial

is particularly true of any targeted goals

established for such a program, which may represent a statement
of

the

institution's

based upon
similar

actual

expectations

of

services

market

The

factors.

loan demand,

will

Agencies

to be provided

conditions,
continue

and other

to

consider

favorably financial-institution leadership in concerted efforts
to improve low- and moderate-income areas in the community and
participation by financial
partnerships

to

promote

institutions

economic

and

in public and private
community

development

efforts.
The examples described above illustrate specific steps
that

have

been

taken,

organizations operating
credit

needs

financial

of

all

in

particular

by

larger

in urban communities,

segments

organizations

of

those

operating

financial

to help meet the

communities.

in

primarily

Smaller
rural

communities may nonetheless find some of these examples helpful
in designing CRA policies

that would meet

the needs of their

communit ie s .

EXPANDED CRA STATEMENT
Financial
agency

regulations

institutions
to prepare

are

currently

a CRA statement

community served by the

institution and

credit

institution

offered

encouraged

to

by

the

describe

their

CRA

to

required
describing

listing
the

the

the types of

community

efforts

by

in

this

and

11

-

statement.

This

statement must

-

be

reviewed by the board of

directors of the institution at least on an annual basis.
noted

above,

management

an

effective

CRA

process

should

also

As

include

review and oversight of the institution's

policies

and performance on a regular basis.
The
useful

for

Agencies

believe

a financial

that

it

institution,

would

be

especially

in connection with

preparation and periodic review of its CRA statement,

the

to expand

the CRA statement to include a description of the institution's
CRA performance.
encourage

The CRA regulations of the Agencies currently

financial

institutions

to

incorporate

description in their CRA statements.

this

type of

This description includes

the institution's efforts to ascertain the credit needs of its
community

and

to

communicate

regarding those needs,

with members

of

the

and the steps taken by the institution,

including through special credit-related programs,
the community's credit needs.
a

readily

describe

available

vehicle

the marketing

institution
services,
Statement,

to

inform

community

to help meet

The CRA statement also provides
for

financial

and

advertising

the

community

and any other steps,

institutions

programs

of

the

used

to

by the

institution's

such as those outlined in this

that have been taken by the institution to implement

its CRA policies.

The

institution

include a summary of the results of
a summary of

the

documentation

regarding its CRA performance.

may also find it

useful

to

its internal CRA

review

and

collected

by

the

institution

12

-

-

An expanded CRA statement along the lines suggested in
existing
part

agency

of the

regulations

institution's

can

be

a particularly effective

outreach efforts

This type of statement would also focus,
the

attention

public

on

of

the

both

the

financial

to the community.

on an ongoing basis,

institution’s management

institution’s efforts

to

and
meet

the
its

responsibilities under the CRA and on any areas identified by
the institution for improvement.
The
statement

Agencies

would

applications

comments

present

process

institution's

believe

a

for

public
Under

by

must

be

an

maintained

in

an

expanded

framework

comment

CRA

outside

regarding

existing

institution

institution’s CRA statement.
institution with

that

suitable

record.

CRA

received

performance

also

rules,

regarding

a public

an

public

its

file

the

CRA

with

the

These public comments provide the

an opportunity

to

identify

areas

of

public

concern regarding its CRA performance and to consider any steps
that

the

concerns.

institution

may

find

appropriate

to

address

these

The Agencies may then review these comments and the

steps taken by the institution to address the comments during
the CRA examination of the institution rather than through the
applications process.
The Agencies strongly encourage financial
to expand their CRA statement
institution's
institution's

CRA

to include a description of the

performance

review of

institutions

its CRA

in

connection

record.

with

the

The Federal Reserve

-

13

-

Board and the FHLBB also strongly encourage holding companies,
as part of the system-wide review and oversight by the holding
company

of

the CRA

institutions,

vary

The Agencies

in complexity

resources,

of

its

subsidiary

financial

to ensure that their CRA statements are expanded

in this way.
would

performance

recognize

and

scope

that

the CRA statement

depending

on

the

size,

and location of the institution.

COMMUNICATION IN ADVANCE OF THE APPLICATIONS PROCESS
Just

as

communicate with
regarding

credit

financial
their

institutions

local communities

needs,

community

are

expected

to

on an ongoing basis

organizations

and

other

members of the public are strongly encouraged to bring comments
regarding an institution's CRA performance to the attention of
the institution and the appropriate supervisory agency at the
earliest possible time.
to wait

to

present

Interested persons are encouraged not

their

comments

through

a protest

to

regarding

an

an

application.
Prompt

submission

of

comments

institution's CRA record provides the institution and examiners
with a timely opportunity
the institution to correct
that

may

not

constraints

of

be

as

to evaluate

the matter

any deficiencies

effectively

the applications

utilized
process.

—

and permits

an opportunity

under

the

time

The CRA regulations

of the Agencies establish a comment procedure at the financial

14

-

institution
encourage

for

use

this

of

purpose,

this

-

and

process.

the

The

Agencies

Agencies

strongly

expect

that

financial institutions will investigate promptly all complaints
and place a high priority on correcting any deficiencies.
The Agencies will consider

any comments

the institution through this comment procedure,

submitted to
as well as any

action or response that the institution deems appropriate,
the evaluation of the institution's CRA performance.
regard,

when considering

public comments

in

In this

received during

the

applications process concerning the CRA record of a particular
institution,
institution

the Agencies will
has

provided

statement that,
by

the

the

into account whether

public

as discussed above,

institution

community.

to

take

The

to

help

Agencies

meet

may

an

expanded

the

CRA

describes the efforts made

the

also

credit

needs

consider

of

whether

its
the

commenter has submitted comments to the institution in response
to the institution's CRA statement outside of the applications
process.

However,

comments

regardless

of

timing,

periods

their

specified

in the

will
as

rules

be

long
of

as

the

carefully

weighed

submitted within
appropriate

the

reviewing

Agency.
ROLE OF CRA EXAMINATIONS
In acting upon
appropriate

applications covered

reviewing Agency will

consider

by the CRA,

the CRA

the

record of

the relevant financial institutions as reflected in examination
reports

(from

the

relevant

federal

or

state

supervisory

15

-

agencies),

the

information

response by the applicant,

-

presented

by

any commenters,

the

and the Agency's own analysis.

As indicated earlier,

the CRA requires the Agencies to

assess

the CRA record of institutions under their supervision

during

the examination process

and to take that

account in evaluating certain applications.
record

of

reports,
process.
as

the

institution,

will

be

given

great

In some cases,

reflected

in

the

as

reflected
weight

however,

examination

record

into

Therefore,

in

in

its

the

the CRA

examination

applications

the institution's CRA record
report

may

need

to

be

supplemented.
The

CRA

requires

the

Agencies

to

consider

the

institution's entire CRA record as an integral component of the
analysis

of

the convenience

and needs

of

the community that

must be conducted when processing certain types of applications
under

federal

statutes

governing

financial

institutions.

The

documentation of that record must be sufficient to support the
conclusions

of

examination

from

often

however,

CRA

reviewing

a supervisory

controlling,

institution's

from

the

factor

Agency.
agency
the

It

record.

in

is

This

is

is

favorable
an

not

CRA

important,

consideration

in the face of significant

a commenter.

A

conclusive

of

and

an

evidence,

and supported allegations

especially

the

case

when

the

examination is not recent or the particular issue raised in the
application

proceeding

was

not

addressed

in the examination.

16

-

In these

instances,

applicants

-

should submit

sufficient

data

upon which the reviewing Agency may base a decision regarding
the
of

institution's
its

record of serving the convenience and needs

community,

substantive

issues

and

should

also

respond

raised by the commenters

to

specific

or the reviewing

Agency.

DOCUMENTATION OF CRA PERFORMANCE
The Agencies expect financial institutions to maintain
reasonable
outlined

documentation

of

in this Statement,

institution

to implement

appropriate

scope

and

the

activities,

such

as

those

that have been undertaken by the

the

institution's CRA policies.

detail of

determined by each financial

this

documentation

The

must

be

institution and should accurately

reflect the institution's CRA policies and performance.
If

a

applications

process

institution's
prepared

to

substantive
that

examination
provide

CRA

the

has

issue
not

reports,

necessary to evaluate the issue.

raised

been
the

reviewing

is

addressed
applicant

Agency

This

in

with

the

in

the

should

be

information

information may include

such items as a description of the CRA policies that have been
established,
policies,
to

help

any

procedures

for

ongoing

review

of

these

and the types of services offered by the institution
meet

description

community

credit

of the resources

needs.

In

addition,

devoted to such services

a
and

the

17

-

extent

-

to which they are distributed throughout the community

has proven to be helpful to the consideration of the issues.
An
policies

outlined

Statement,
in

applicant

factor

established

the

type

in the applicable CRA regulations

on

with

the

under

CRA

policies,

component

applicable

The

applicant

application

guidelines

these

the

transaction.
the

has

of CRA
and this

and that is able to document that it is performing

accordance

finding

that

within

(assuming

of

can

the

expect

convenience

federal

statute

that

reviewing

financial

and

the

timely action on

A g ency’s

and

needs

governing

can also expect

the

a favorable

other

processing
factors

are

favorable).
Where
show

that

the examination or application

the

institution

policies,

however,

Agency

develop

to

institution's
needs.
process

has

it will
the

record

be

instituted
necessary

information
of

helping

these
for

required
to

record fails

meet

types

the

to

to

of

reviewing

evaluate

community

the

credit

A poorly documented record may prolong the application
in

order

for

the

reviewing

Agency

to

collect

the

information needed for its decision.
Where the record shows disparities
not

appear

to

be

attributable

considerations

or

the

Agency

reviewing

to

to factors beyond
will

inquire

safety

areas

of

its community,

and

soundness

an institution's
into

the

efforts to ascertain the community's needs,
all

in lending that do

control,

institution's

to communicate with

and to advertise

and market

its

18

-

services
Agency

throughout

will

also

its

-

delineated

consider

all

community.

available

The

reviewing

information

to

determine whether any policies and practices of the institution
may

discourage

discriminate
community.

credit

applications

against,
Where

from,

individuals

the

or

or

unlawfully

segments

of

institution’s record under

the

the CRA

is

found not to be consistent with its obligations under the CRA,
the

reviewing Agency,

after weighing

all other

factors,

may

deny the application.

ROLE OF COMMITMENTS FOR FUTURE ACTION
The Agencies

believe

their CRA responsibilities
place

and working well

fulfilling
financial

their

viewed

CRA

as

financial

issues.

part

of

the

institution,

may

decide

of

specific

for

such

problems

CRA

to

the

CRA,

initiate

programs

a strong CRA

In

for

record or

future action

of

performance

record

in

however,

for

of

are not
the

in the institution’s performance.

improvement

can

in

an

otherwise

also

be

be

appropriate

may

performance

in the context

institution.

address

but may be given weight as an indicator

Commitments

financial

should

an application.

under

assuring

Commitments

of potential for improvement
Commitments

they file

responsibilities

institutions

applicants

and have the necessary policies

before

future action as a means
resolving

that

of

the

In some

used

to

satisfactory
in

record.

addressing

acquisition of

cases,

address

CRA

a troubled

these commitments

are

19

-

important

to

the

considerations
application.

conclusion

are

that

consistent

In general,

-

convenience

with

and

approval

needs

of

the

commitments made in the applications

process cannot be used to overcome a seriously deficient record
of

CRA

performance.

require

financial

designed

to

The

Agencies

institutions

improve

may,

to

where

take

CRA performance

specific

by granting

approval of an application.

In such cases,

an

effective

agency

generally

confirming

that

the

becomes

financial

appropriate,

or

institution

actions

conditional

approval granted by
final
has

only

after

satisfied

the

appropriate conditions.
In line with the
that

the

CRA

allocation

of

was

not

credit,

long-standing view of

intended
the

to

Agencies

establish
have

a

the Agencies
regulatory

neither

requested

commitments from applicants to make particular types or amounts
of loans nor specified the terms or conditions for such loans.
The Agencies will review whether the policies that an applicant
commits

to

adopt

deficiencies,
whether

if

are

reasonably

any,

found

those policies

in

directed
the

at

the

applicant’s

type

record,

of
and

are consistent with the safe and sound

operation of the financial institution.

ROLE OF MEETINGS
While not required under the CRA or the regulations of
the Agencies,

the Agencies have in many instances found private

meetings between an applicant

and a protestant

Such

the

meetings

may

clarify

matters

at

to be helpful.
issue,

-

assist

the

information

Agencies
is

in

and,

-

determining

required,

necessary analysis,

20

help

whether

to plan

additional

the direction

in some instances,

submit

the protestant

information

and applicant

to clarify or

to

the

resolve differences

based on misunderstandings between the parties.
often provide

of

These meetings

an opportunity to

support

points

made

in

their written submissions.
Although the Agencies believe that ongoing discussion
between

a

financial

institution's
community's

community

needs,

formal agreement,
process,
may,

is

institution
is

the

any decision

best

to

the

determine
or

the parties.

to

a

reach

a

The Agencies

facilitate private meetings and may

In doing so, however,

is voluntary.

way

of

either during or outside of the applications

in appropriate cases,

a neutral role,

members

to negotiate

at the discretion of

attend them.

and

the Agencies will maintain

and attendance and participation by the parties
The purpose of such private meetings

is not to

provide a forum for the negotiation of a formal agreement among
the parties,

and the Agencies

agreements.

Moreover,

do not

require or enforce such

the Agencies do not believe that it is

appropriate to suspend processing

an application to allow the

parties

or

to

conclude

negotiations

unless requested by the applicant.

to

reach

a

settlement

The Agencies will act on an

application once it has obtained a record sufficient to support
a determination in the matter.

21

-

Each Agency may,

under certain circumstances,

public

meeting,

hearing

or

Agency

may

that

public

find

a

oral argument.

application would be helpful
record

for

ordered

decision.

A

-

meeting

in order

public

or

example,

hearing

to develop

meeting

if the written submissions

For

or

order a

on

an

an

a complete

hearing

may

be

and materials presented at

the private meetings do not develop an application record that
the
such

reviewing Agency believes
situations,

the

is sufficient

decision

to

call

for decision.

a public meeting

In
or

hearing would not be based on the inability of the parties to
reconcile their differences
the need

for

through

additional

such

regulations

a

information

process.

and

in private meetings,

Each

that might

Agency

procedures with

but rather on
be collected

follows

respect

to

its

own

ordering

public

meetings, hearings or oral arguments.

EXTENSION OF COMMENT PERIOD
Parties desiring to comment on applications,
those wishing
financial
time

to comment

institution,

periods

specified

on the CRA

should
in

do

the

record of

so promptly
rules

of

a particular

and within

the

that

carry out
applicable

this

their
time

is important

in order

for

responsibility to process
limits

consistent

with

the

appropriate

reviewing Agency and the relevant public notices.
believe

including

The Agencies

the Agencies

to

applications within

the

public

interest.

22

-

-

Timely submission of comments also provides an opportunity for
response

by

applicants

and

ensures

time

for

any

necessary

analysis by the reviewing Agency.
In
extensions
upon

accordance
of

time

a showing

agency

of

with

the

rules

of

for public comment will
good

regulations.

cause

or

For example,

appropriate where the

the

Agencies,

be provided only

as otherwise

permitted

by

a brief extension would be

application has not been promptly made

available for inspection by the parties or where there has been
inadequate public notice of the application.

The Agencies do

not believe that extensions of time are appropriate solely when
the commenter desires more time to conduct discussions with an
applicant.

An extension of the comment period will only be for

a brief period and normally will not be appropriate if it will
extend the application-processing period beyond the time limits
established

in

the

relevant

statute

or

Agency

rules.

A

commenter that fails to submit comments on an application until
after the close of the comment period (or any extension) may be
precluded from participation.

CONCLUSION
The
institutions
CRA

Agencies

consider

act effectively

in a positive

it

important

to meet

and ongoing manner.

the

that

financial

requirements

The Agencies

of

the

believe

that this can be done in a way that will not only benefit local
communities,

but

also will

b. consistent
€»

with

the

safe

and

-

23

-

sound operation of financial institutions.
requires

managerial

institution's

effort,

processes

oversight

for meeting

Doing so, however,

and

review.

the credit

needs

An
of

its

community must reflect an understanding of those needs and take
into account changes
needs.

By

applying

that may occur
sound

in the community's credit

management

challenges presented by the CRA,

techniques

towns and rural areas

thereby benefiting themselves as well as the

communities that they serve.

(signed) William W. Wiles

William W. Wiles

March 21, 1989

the

financial institutions can be

agents of positive change for the cities,
of this country —

to

FEDERAL RESERVE BANK OF DALLAS
STATION K
DALLAS, TEXAS 7 5 2 2 2
ADDRESS C O R R EC TIO N REQU ESTED


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102