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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