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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 banking
authorities' CRA expectations beyond those found in the law itself or other
implementing regulation (such as Federal Reserve Regulation BB). The
statement describes the characteristics of CRA programs which have generally
been regarded as highly effective. It recommends the adoption of related
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
your officers and directors.
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.
ATTACHMENTS
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
Andrew 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 21-, 1989
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
concern
The
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
policy oversight,
most
that
to
assure
that
and markets those products
management involvement,
likely
and services
the
active
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
CRA
experience
of
process
must
the
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
that
least
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
factors.
expectations
of
services
loan demand,
market
The
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
CRA
received
performance
also
a
public
record.
Under
be
an
maintained
in
an
expanded
framework
comment
CRA
outside
regarding
existing
institution
institution’s CRA statement.
institution with
that
suitable
for
by
must
believe
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
record.
Agency.
agency
in
the
It
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
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
be
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
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DALLAS, TEXAS 7 5 2 2 2
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