The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
federal reserve bank of DALLAS. TE X A S Dallas 75222 C irc u la rN o . 79-54 March 22, 1979 REGULATION BB—THE COMMUNITY REINVESTMENT ACT Frequently Asked Questions About the Community Reinvestment Act and Regulation BB TO STATE MEMBER BANKS IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The four Federal supervisors of financial institutions responsible under the law for enforcing the Community Reinvestment Act have issued a second set of staff-prepared answers to questions frequently asked about the Act, the implementing Regulation BB, and examination procedures. The firs t set of questions numbered 1 through 15 was transmitted to your bank with C ircular No. 79-22 of February 1, 1979. These questions and answers are staff prepared and should not be taken as official interpretations of the Act itself. The purpose of trans mitting them is to provide useful background information to your institution and the public. A copy of the second set of questions and answers numbered 16 through 25 is printed on the following pages. Additional questions should be directed to our Consumer A ffairs Section, E xt. 6171. Sincerely yours, Robert H . Boykin F irst Vice President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank: 1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). For calls placed locally, please use 651 plus the extension referred to above. 16. W ill ac tiv ities in addition to lending be considered in the on lo an s, Agencies CRA a s s e s s m e n t ? Answer - Yes. recognize CR A's W hile go als. men t developm ent such as effo rts opening and The needs closin g of d irectors the in the w ith respect to 17. W ill in s t it u t io n 's credit an needs ap p licatio n s o? be assessed covered by the m unicipal in bonds a community the o fferin g sp ecial credit p o licies of- t h e CRA o r an is by the co mm u ni t y record (in clu d in g at its to its in s t it u t io n 's review in g non programs o ffered of board perform ance CRA. perform ance if services involve member s c o n in s t it u t io n 's services an activ ities cred it-related and or lo c a l with p a rticip a tio n even which the rev italizatio n consider of purposes toward to w ill an d form u lating extent also and aware of the contribu tions community, m arketing con tribute community or the a dialogue branches extent State Agencies the effo rts lo cal other establish community members and or is consider foster of focus and w ill purchase to se rv ic e s), o ffices, of the p ro ject. cred it make Agencies investm ent cerning cred it p rin cip al ac tiv ities exam ple, through ac tiv ities Th e in s t it u t io n 's — for other that the in h elpin g in stitu tio n le g a lly to does meet not p reclu ded c o mm u n i t y make an from d o in g - Answer - Yes. rejection m en t to by of W hile each and S&Ls to lo c a l needs. the A gencies catio n s 18. the is cred it Answer - w ithin the to the needs be of to use to on-going sound its th eir by and that encourage and envisioned th eir of inform ation representatives to the approval community basis, it exam inations the not Congress, "to lim ited to the sought encourage" to th is or invest also resp o n sib ilitie s This stand purposes the the Second, h elp meet effo rt form al by ap p li the provid ed in three resources, technical h elp an d the regulation s, CRA, exchange CRA a n d the w ill how t h e ways. th eir assistan ce in dustry the to meet com m unities? Agencies' and of be in stitu tion s and h elp staffs w ill management and F irst, of w ill be m eeting in dividu al exam ination in stitu tion s Agencies be plan to to pro under im ple Act. as w ill tu tio n 's lo ca l inform ation of "encourage" w ill exp lain cedures. suggest Agency Agencies lim its in stitu tio n s staff As used safe sen sitive Encouragement pro vid in g men t a directed process. How w i l l with be be on supervisory in stitu tion s credit Congress ap p licatio n s banks have the 2 - part of each CRA e x a m i n a t i o n , Agency discu ss w ith management fin din gs CRA p e r f o r m a n c e . ways in which the Where th eir ap prop riate, in stitu tion can exam iners the im prove and regarding Agency its fie ld the staff in sti may perform ance. - 3 - Third, tor, of in the decision s Agencies on ap plicatio n s, w ill p u blicly where comment CRA i s on an a m aterial in s t it u t io n 's fac record perform ance. 19. W ill loan s in stitu tio n outside Answer w ill an - The focus needs tion s, an d of to lo ca l its loan s meet or of the CRA a s s e s s m e n t of procedures an in s t it u t io n 's The set Act, no in stitu tio n credit w ill an in stitu tio n com m unities. community poor community. that lo cal a for making community? record w ithin community helpin g its the given assessm ent exam ination amount lo c a l lo c a l A gen cies' on cred it the its be If an in h elpin g to mee t im plem enting num erical should ac tiv ities affect the regula criteria make in stitu tio n needs, not perform ance w ithin is for its effe ctiv ely conducted in s t it u t io n 's outside CRA p e r f o r m a n c e record. 20. to Hay an existin g in stitu tion custom ers, use a p o licy w ithout of making ad v ersely certain affectin g its loans only CRA assessm ent? Answer - sp ec ial of In exam ining atten tion those types CRA S t a t e m e n t Exam iners have a w ill of that to an in stitu tio n , the any restrictio n s placed credit it focus sig n ific an tly that would on an greater in stitu tio n extend whether A gencies any impact in its such on on has lo cal w ill the a v a ila b ility , indicated on its community. restriction lo w - pay has or would and m o d e r a t e - i n c o m e - neighborhoods F air the Housing and rem ainder consider an d and/or the whether w ith le ss taking regardin g w ill for to basis. the for rela tiv e under the serve and the or a as perm anent a good any restrictive the re stric tio n (s) basis In p o licy , purpose review th is review becoming a addition, adopted a to customer exam iners p o licy response which of spot le n d in g an in s t it u t io n 's should noted. o cca sio n a lly custom ers— lo an s type w ill circum stances of of on of tigh t lim itin g money p o licy . on in stitu tio n s th is and aspect tem porary with that exam iners conduct d iffic u lty has does same b u s i n e s s restrictio n . the a p a rticu la r facts One in stitu tion custom ers the the than case, w ill account. ease as or This restrictio n it adopting Exam iners to CRA S t a t e m e n t loan s ratio n ale under Acts every im pact. whether available recognize In into protected O pportunity would credit lo an s C red it borrow ers community. effects the of p o licies sp ec ific its c o n d itio n s Loans the other may c o n s i d e r certain of busin ess involve elig ib le Equal adverse the classes 4 - do ac tivity liste d However, make they be certain not need the the agen cies sp ec ialized o ffer not on be on a regular liste d on CRA S t a t e m e n t . 21. In seek inform ation Answer assessing - b eliev es pictu re The exam iner that of outside the it is of w ill the seek necessary in s t it u t io n 's to CRA p e r f o r m a n c e , in stitu tion such being inform ation com plete perform ance. a fair For w ill an exam iner examined? if and he or she accurate exam ple, if the - exam iner munity of believes is that u nreason able, other, sim ilar may b e tu tio n 's perform ance, 22. What Answer - A poor enforcem ent prohibited are the other 23. Are the factors Equal who have o ffic ia ls, and under C red it consumer as and the record com pliance preparing providin g or other the addition, on an in sti owners, under resu lt the fu ll with in range the p u blic com O pportunity Act, Federal CRA? of of notice. fair in of m aintaining In addition, p ractices resu lt an th eir requirem ents credit also the denial CRA S t a t e m e n t , ille g a l protection In A gencies w ill which san ction s housing law s, law s. CRA? Answer have - G en erally , d ifferen t electro n ic co n su lt th eir such ru les d eposit for the a com others. may use its d elin eatio n s busin ess CRA, cred it ap p lica tio n s to of commented lo ca l brokers, may a l s o ensure file s, the persons av a ilab le such review community. estate discrim in ato ry adverse under or to may the Agencies powers descriptio n in CRA p e r f o r m a n c e Th e comment exam iner lo ca l are CRA r e g u l a t i o n s pu blic the with real san ction s ap p licatio n . the made residen ts, in s t it u t io n 's in stitu tio n s contacts munity the 5 - electro n ic ap p lication s regarding fa c ilitie s supervisory deposit are p rocessin g and Agency fa c ilitie s covered. of filin g . should, by Agencies ap p licatio n s in stitu tion s before The covered for th erefore, - 6 - 24. by How a r e the and savings - The merge or CRA a p p l i e s to acquire tion s. Reserve Board Loan pan ies, in B ank w ill the take of the company n e ed comment file s, conform , m edia 25. notices a - those ap plyin g com panies may request, any of the meet the cant bank by or the h oldin g be any bank or affected S&L. For of are made, and of notice. The requirem ents to of ap p lication s by associa Federal the Federal h oldin g of com the bank or The p a r e n t m aintain holdin g the acquire the all company. com panies loan an d loan CRA S t a t e m e n t , file d and com panies, CRA r e c o r d s a holdin g pu blic c o m p a ny regulation a bank banks or and for S &L. S & Ls that companies? or be S & L 's by savings savings holdin g or treated that needs of the a bank w ill and holdin g a p u blic S&L w i l l b a n k 's or case CRA a f f e c t however, cred it bank prepare to by banks file d a p p lica tio n s account prepare of c o m pa n y bank of ap p licatio n s the file d such the not A pp licatio n s holdin g as of subsidiaries Answer holdin g ap p lica tio n s ap p lican t however, How d o e s are or on in into h oldin g to case Board S&L a f f i l i a t e s must loan com m ercial When d e c i s i o n s Home and CRA? Answer to bank S&L. taken the S&L by that the Agency the community exam ple, if the subsidiary in consider or the CRA r e c o r d account. n on d epository the a Agencies Only into is The the a ffilia te s same way of bank the or S&L contribution in com m unities ap plican t of bank helping of to of the ap p li or S&L teas an - 7 - a ffilia te community d e v e l o p m e n t co rp o ratio n community as ap p lican t bu tion s of the that the p a rticu la r the o v erall ap p lican t, corporation community be CRA r e c o r d of the in operating may a s k h elpin g to meet considered by the the ap p lican t. the in that the the cred it Agency in same con tri needs of assessing