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EFFECTIVE IMPLEMENTATION OF THE COMMUNITY REINVESTMENT ACT GOVT.PUB US UNIVERSITY OF CA RIVERSIDE LIBRARY [ 103 ] ULLIN .B 22/1 3 1210 01404 7664 103-47 HEARING BEFORE THE SUBCOMMITTEE ON GENERAL OVERSIGHT, INVESTIGATIONS, OF THE COMMITTEE ON BANKING, FINANCE AND ONE HUNDRED THIRD CONGRESS FIRST SESSION JUNE 22, 1993 Printed for the use of the Committee on Banking, Finance and Urban Affairs Serial No. 103-47 UNIVERSITY OF CALIFORNIA APR 0 7 1994 LIBRARY GOVERNMENT PUBLICATIONS DEPT HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HENRY B. GONZALEZ, Texas, Chairman STEPHEN L. NEAL, North Carolina SUBCOMMITTEE ON GENERAL OVERSIGHT, INVESTIGATIONS, AND THE RESOLUTION FLOYD H. FLAKE , New York , Chairman STEPHEN L. NEAL , North Carolina ( II) 1 CONTENTS Page Hearing held on: 1 25 WITNESSES TUESDAY, JUNE 22, 1993 4 26 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD New York State Banking Department: 40 72 ( III ) EFFECTIVE IMPLEMENTATION OF THE TUESDAY, JUNE 22, 1993 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GEN 2 As I have stated previously, I believe it is time for Congress to rethink the goals of CRA and to amend it in a manner that allows all individuals equal access to affordable credit. I do not think that we should create a new system of banks designed specifically to meet the needs of lower and moderate -income individuals, but rath er, require the existing federally insured depository institutions to fulfill the mandate of serving all Americans. 3 At this time I would like to recognize the ranking minority Mem ber of the subcommittee, Mr. Toby Roth of Wisconsin, who will be recognized for his opening statement. a 4 discussion last week we — you indicated that you would like to do an opening statement and then kind of spend time in some way discussing the 11 points that you would like for us to give consider ation to . And so we are happy again to welcome you, and the time is yours. STATEMENT OF DERRICK D. CEPHAS , SUPERINTENDENT OF 5 believes — in fact, I would say this is a principal thesis of our entire proposal we believe that bank regulators, and not the community groups, should bear the principal obligation to ensure that CRĂ laws are enforced . 6 by any particular group. I don't think it would be accurate to blame the banks or the community groups or the regulators. The problem really is in the system itself. 7 or not a specific investment will qualify, we will impose a mecha nism in very simple form ; they apply to the banking department, we will issue an opinion yes, this qualifies, no, it does not. At least that will, I think, remove one bottleneck in the whole investment process. 8 system does need significant overhaul. Credit allocation I think was mentioned here earlier. That has been a problem that has been raised, and we are aware of some of these criticisms and when we put the amendments — when we put the regulation out and we gain some experience with it, there may be some need here and there to revise it or amend it. But I think on balance, our quantitative system is far preferable to the subjective methodology currently being used . a 9 the consumers. So what this questionnaire is designed to do is just to provide the banking department with basic data on the relation ships between a bank and its serviced area . ner. 10 We believe that our regulation 11 statute is broad enough to permit regulations; and two, thereis a will and a desire on the part of the State regulators in New York to use the regulation in this fashion . So in our State we do not need legislation. We are able to do it through our regulation be cause of the political will; we believe it is the 12 ChairmanFLAKE. So that you are hoping that somehow from the Federal level, whether by regulatory process or by legislative proc ess, we create a mechanism that creates conformity for all of the regulatory bodies ? 13 from beyond that 3 -year period going back to what may have been in some instances their historical practices, and does a community group, if we adopt safe harbor provisions as you have them , then lose its ability to be able at some point say in the 3rd, the 4th, the 5th year, the 6th year, to be able to stand at a hearing and give its objections to a merger or whatever other kind of business the bank is expecting to venture into ? zen . « » 69-485 O - 94 - 2 14 Eighty percent were " twos,” 8 percent were " threes. ” Now, in my view , a rating system , when you have 80 percent of the banks in one category, “ twos," what we are trying to say is, there ought to be some grade differentiation . This is grade inflation, like college or something 15 Mr. ROTH . In - I am sorry for interrupting, but many of the States, you know, when they have adopted State laws and so on, they follow like maybe New York or California or Wisconsin . When the States look for guidance for a CRA, do they look to your State ? What State primarily do they look to when they adopt CRA laws? > 16 we believe in our effort , but we are certainly willing to step back and work with others who are trying to go in the same direction. 17 issue, just because we don't regulate those people, and for us, it really is a more theoretical issue than a practical issue. But I can see, 18 we have about 240 foreign banks doing business - doing a banking business in New York, probably another 100 or so representative offices. Of that group — these are rough numbers — I think about 20 are actually FDIC insured, of the 240. 19 of information , because this is increasingly a very burdensome issue for the institutions. 20 this context, even with that criticism from the press. I don't think that is an inappropriate approach , ifyou get results. 21 on some of the questions. We now were to focus 2 days of public hearings in March where we again had about 44, 45 witnesses pub licly ; they all submitted written documents, written documentation as well. Then we spent a fair amount of time going through the tran script of the public hearing and reading through all those com ments again , and we have not gotten uniform agreement on all of these 11 questions. Surprise, surprise. But what we did — we ac complishedthe followingthing. once . a 22 Mr. RIDGE . I like the - I take comfort in your trying to promote this holistic view as an entire package as well, because there are a lot of things that these institutions have to do before they get their first “ one,” let alone do it thrice before they qualify for that safe harbor and that is very encouraging. I am also encouraged be cause you as a regulator have echoed an expression of concern and probably a publicembrace of your approach by a witness that Con gressman Flake invited about a month ago from one of the leading banks , NationsBank . 23 tively at the Federal level as opposed to being able to be done regulatorily ? a 24 building of housing in these communities. I think that is important to all of us, and to the best benefit and the good of the Nation. Thank you very much . 25 APPENDIX June 22 , 1993 26 STATEMENT OF DERRICK D. CEPHAS BEFORE THE U.S. HOUSE OF REPRESENTATIVES SUBCOMMITTEE ON GENERAL OVERSIGHT , INVESTIGATIONS , AND THE RESOLUTION OF OF THE COMMITTEE ON BANKING , FINANCE AND URBAN AFFAIRS JUNE 22 , 1993 1 WASHINGTON , D.C. 27 Good morning Chairman Flake , members of the Subcommittee on General Oversight , ladies and gentlemen . My name is Derrick Cephas and I am the Superintendent of Banks of the State of New York . I greatly appreciate the opportunity to be here today to present the views of the New York State Banking Department regarding the Community Reinvestment Act . We have spent the last 9 months preparing a proposal to restructure the manner in which CRA is enforced in New York State . current status I would like to share with you the of observations regarding CRA in general . GENERAL BACKGROUND CRA is a very important issue and I commend Chairman Flake and the entire Subcommittee for the significant contribution that you have made in this area . 28 approval process . While a bank ostensibly is required to comply with CRA if its deposit accounts are FDIC insured , a bank's CRA performance becomes relevant legally only when and if it seeks regulatory approval to open a branch , to make an acquisition or to engage in some other legitimate business objective covered by CRA . We believe that CRA compliance should be the ongoing responsibility of banks . concomitantly , community groups should be involved in the CRA process on an ongoing basis , again not solely or primarily in the context of the regulatory application process . We believe that greater emphasis should be placed on ongoing bank compliance and community group involvement , and that the current emphasis on using the regulatory application process to enforce CRA is misguided and should be greatly reduced . we other users of banking services and their representatives are , to a large extent , the principal enforcers of CRA . They press the banks for greater community investment , they file the regulatory protests and they engage the banks in verbal combat in an effort to increase bank CRA participation . We believe principal thesis of our proposal is that not community groups , should bear that indeed a bank regulators , and the principal obligation to ensure that the CRA laws are enforced . system inevitably produces conflict between banks and community groups . If a bank , Indeed , the structure of the 2 current 29 no matter how stellar its CRA performance , is still likely to be made the subject of a regulatory protest if it seeks to make an acquisition or open a branch , then there is a built - in incentive for that bank to refrain from participating in CRA activities to its full potential since more will be required at the time of a regulatory application . Similarly , there is need less for community groups to pursue bank CRA investments on a consistent basis , since there is more " bang for the buck " by waiting for the unique opportunities created by the regulatory application process . contain quantitative standards , enforced on a consistent basis , overall increase in the level and if those standards were there would be a significant of CRA investment in local justification for regulatory communities and far less need protests . Finally , we believe that the current CRA system encourages banks to focus on process , procedure and documentation at the expense of a more substantive , investment - oriented approach . This is another unintended result of the regulatory protest mechanism , because even voluminous a " 1" rated documentation to bank will shield protest . 3 be itself required in the to produce event of a 30 The above summarizes , generally , the broad objectives of New York State's CRA proposal . one that The end product , we believe , will be is consistent with the interests of banks , groups and regulators . community We have tried to design a new approach to CRA participation and CRA enforcement . We expect that , in the aggregate , banks will be required to increase their level of CRA activity in New York . For those banks who have already undertaken a serious and consistent effort to meet their CRA obligations , the New York proposal should relieve them of a significant degree of regulatory burden and regulatory uncertainty . On the other hand , for those banks who have not seriously pursued fulfillment of their CRA obligations , our proposal will require them to do more . For those banks desirous of complying , our proposal should facilitate easier compliance ; for those who are not desirous of complying , their annual ratings are likely to decline . Let me say that the flaws in the current system were caused by any particular group . not It would be inaccurate to blame the banks and , similarly , we do not believe that the community groups or the regulators are at fault . itself . The problem is the system There is little possibility for meaningful improvement in 4 31 SPECIFIC PROVISIONS With the foregoing as background , I would now like to explain certain of the specific provisions of our proposal . The original proposal , which was disseminated in the form of 11 questions , was issued for public comment in September of 1992 . A copy of the original proposal is attached to this testimony so that it can be made a part of the official record of this hearing . time considerations today , Because of I will address the 5 most important provisions in the proposal : A Specific List of Categories of CRA Qualified Investments We have compiled a list of over 20 broad categories of activities and investments which qualify for CRA credit in New York . The purpose of creating the list is to provide a greater range of opportunities for banks to satisfy their CRA obligations . While direct lending must remain the primary manner in which a bank meets its CRA obligations , we believe that banks are well suited to assist their communities in many other ways . exhaustive list ; it The list is not an is merely representative of the types of activities which qualify for CRA credit and is not intended to preclude banks from pursuing other CRA activities not set forth on the list . In addition , banks are not required to engage in any of 5 32 for the list as well . Pre - Investment Opinion on CRA Eligibility In those cases wherein a specific activity or investment does not fit within any of the categories on the list of authorized CRA investments discussed in the preceding paragraph , we have established a mechanism pursuant to which banks have the ability to seek a pre - investment opinion from us as to the CRA eligibility of the proposed investment . We have found that uncertainty as to CRA status will sometimes inhibit a bank from making an investment that it would otherwise be inclined to make if the bank knew that such investment was CRA eligible . This pre - investment opinion option , coupled with the authorized list discussed above , significant extent alleviate this uncertainty . would to a Our pre - investment opinion will not endorse any particular investment , project or community group . We will not opine as to the appropriateness , suitability or compliance with safety and soundness standards of any proposed CRA investment . to make those decisions . As in all other cases , the banks have We will simply state whether or not the investment , if made , will entitle the bank to CRA credit . Quantitative Scoring System We will establish a CRA rating system which will make use of objective , quantitative data . A bank's annual CRA rating will be derived by combining the results of a quantitative analysis with 6 33 activities its against deposit liabilities . It will be extrapolated from a numerical computation , which computation will measure the percentage of a bank's deposits which are invested in CRA related assets . The 1-4 rating system will be retained . In order to receive a specific CRA rating ( for example , a " 1 " or " outstanding" rating ) , a bank will ordinarily be required to invest a minimum specified amount of its deposits in CRA related activities . The results of the qualitative analysis will be arrived at by making use of subjective factors . Inescapably , a CRA examination is to some extent inherently subjective and no reasonable system of CRA no matter how quantitative , evaluation , should completely eliminate the qualitative ( and therefore subjective ) nature of the several other institution , opportunities relevant factors , such its financial condition , in and the demographic as the size of the availability of characteristics of the CRA the marketplace served by the bank , the unique nature of certain types 7 34 certain have CRA investments may cause some learned to do business under the current system and have therefore grown comfortable with it may oppose our proposal , even as they acknowledge the great flaws in the current system . The Let me acknowledge spectre of credit allocation may be revived . that there may be some validity to these criticisms , and we may well have to revise or amend our regulation from time to time as the need arises in order to address these concerns , although we are least troubled by the credit allocation criticism . on balance we believe that a quantitative system is far preferable to the excessively subjective " methodology " employed to determine CRA ratings . currently Under the current system , it is very difficult for banks to reasonably predict their ratings , or to predict reasonably the manner in which the regulators will view their CRA performance in the context of a regulatory application . Moreover , the bank examiner's task of analyzing CRA compliance relies far too heavily on subjective judgments . The addition of a quantitative analytical framework will bring about a greater degree of fairness and predictability in the CRA scoring system . Safe Harbor Provision We intend to institute a so - called " safe harbor " which would shield banks with " outstanding " protests in the regulatory application process . received an outstanding ( " 1" ) rating on its provision CRA ratings from A bank that has last three CRA examinations ( which must include one on - site examination ) would be 8 35 assured that its past CRA performance would not constitute a bar to Once a bank has qualified regulatory approval of an application . for the " safe harbor" by achieving three successive " 1 " ratings , the " safe harbor " would exist so long as the bank maintained a " 1 " rating . A " safe harbor " would serve as an incentive for banks to strive for an outstanding CRA performance . Under the current system , there is no incentive for banks to put forth the extra effort required to receive a " 1 " rating . The Banking Department recognizes that the creation of a " safe harbor " may be perceived as having the effect of reducing community group involvement in the CRA process . However , we believe that the impact of community group involvement in the CRA process will actually be enhanced if community group comment is solicited in a formal and continuing manner as part of the CRA examination process . Enhanced Community Group Participation We plan to institute measures to increase the community group involvement in the CRA process by ( i ) level of formally soliciting written comments from community groups as part of our annual CRA examination and ( ii ) publishing the annual CRA ratings for each of the state chartered banks which we examine . groups currently do not play an active role during Community the CRA With regard to the solicitation examination process in New York . of community group comments , we have developed a standardized , written questionnaire to facilitate the gathering of information from community groups . In this manner , the comments of community 9 36 groups be will specifically verified solicited , considered , as appropriate , by the Banking Department in arriving at the annual CRA ratings . With regard to publication of CRA ratings , the Department believes that periodic publication of all ratings will be useful to community groups and may encourage ongoing dialogue between banks and the community . Currently , community groups may obtain bank CRA ratings by filing a Freedom of Information Law Request with the Department's Public Information officer . Despite the fact that CRA ratings have been publicly available in New York since 1984 , this information has not been widely used by community groups to address particular bank deficiencies prior applications for regulatory approval . to the filing of bank The Department believes that the role of community groups can be meaningfully and responsibly expanded to encourage a continuing dialogue with banks on community credit needs . Other Provisions The original proposal contained six other provisions , following three of which will be implemented in our July regulation : 10 the 22 37 to provide banks with a formal procedure for reviewing the Banking Department's preliminary conclusions before the annual CRA rating is finalized . The other three original proposals , which involve ( i) expanding the number of regulatory applications subject to CRA, ( ii ) considering past ( as opposed to current ) the annual evaluations and ( iii ) CRA performance in repealing certain reporting requirements for banks with less than $ 100 Million is assets are not being implemented . CONCLUSION The State Banking Board is scheduled to issue the regulation for public comment on July 22 , 1993 . The comment period commences upon issuance of the regulation and , in the ordinary course , the regulation would be adopted in final form in October of 1993 . We began work on this project more than 15 months ago . We have reviewed more than 70 written comments from banks , community groups , community advocates , public officials , academics and other residents of New York and elsewhere . We conducted over 15 hours of public hearings , with testimony from 44 witnesses . privately with a large number of interested supporters and opponents of the proposal . 11 We have met parties , both 38 disagreements over certain of the issues , all parties involved in the have process conducted themselves in responsible and respectful manner . refinement may well be required . Our rule -making process is flexible enough to make the necessary adjustments . But I believe that there is little doubt that our proposal will materially increase the amount of local community lending in New York while reducing the regulatory burden and uncertainty currently faced by the banks . Stated simply , that is our goal . although the issue is implicit in all that I have said today . are obviously not advocating that banks satisfy their We CRA obligations by compromising on safety and soundness . That would be a bad public policy and bad business judgement . 12 Banks in New York 39 lending into their overall business plans as " profit centers " along with all of their other products . In closing , let me say that I hope that my testimony today contributes in some small measure to our common efforts to reform CRA . I also hope that the Congress and the federal bank regulators work together to revise CRA on the federal level in a manner that is not inconsistent with the model which we plan to develop in New York . I believe that the day has passed when we might question the advisability of CRA as a concept . Given our national history and given the current demographic distribution and availability of banking services , government intervention in the form of CRA is necessary . Our task is to reform CRA to make it more responsive to the needs of the banks and the communities who use it . very much . 13 Thank you 40 HACELSIOR SI ATE OF NEW YORK BIKIV ; DEPARTMENT DERRICK D. CEPHIS SUPERINTENDENT OF BANKS September 9 , 1992 TO THE CHIEF EXECUTIVE OFFICER OF THE INSTITUTION OR TO THE EXECUTIVE DIRECTOR OF THE COMMUNITY GROUP ADDRESSED : Enclosed with this letter is a document requesting public comment on a Banking Department proposal to revise the manner in which the community Reinvestment Act is administered in New York . While the Banking Department has been encouraged both by the CRA contributions of a great many of the banks which we regulate and by the The specific proposals set forth herein are offered for public comment in an attempt to suggest an alternative approach to CRA participation and enforcement . We believe that the reach of CRA has not kept pace with either the changing nature of the banking system or the evolving needs of local communities . We have found that measuring CRA performance involves too little analysis of quantifiable , objective data . 41 The financial services marketplace is experiencing increasing competitiveness, consolidation and globalization . believe that these trends are beneficial to the financial system as a whole and will bring substantial benefit to the public generally . Yet , as the focus shifts increasingly to the creation of state and a world -wide financial marketplace, it is all important that critical issues within the local service these multi-state and global banks continue to receive attention . a multi the more areas of adequate The New York State Banking Department has over the years attempted to strike an appropriate balance between the needs of banks to compete locally and worldwide and the credit and other financial services needs of local communities . The policy statement issued today is but a continuation of that effort. Very truly yours , Denick Ophen -2 42 ACELSIOR STATE OF NEW YORK BANKING DEPARTMENT DERRICK D. CEPHAS SUPERINTENDENT OF BANKS September 9 , 1992 NEW YORK STATE BANKING DEPARTMENT PROPOSED COMPREHENSIVE POLICY As part of its periodic review of the statutes and regulations which it administers , the Banking Department has undertaken to review and evaluate its role in defining , implementing and monitoring compliance with New York State's Community Reinvestment Act ( " CRA " ) , codified in Section 28 -b of the New York Banking Law and implemented by Part 76 of the General Regulations of the Banking Board . CRA , which dates back to the 1970's , has not undergone a comprehensive review on the state level since its original enactment . 43 They are as follows : ( 1) the need to employ objective standards ( i.e. , numerical and/ or other quantifiable data ) in monitoring bank CRA ( 2) the need to expand the types of applications for which compliance ; bank CRA performance is a factor to be considered by the Banking Department in granting regulatory approval ; ( 3) the need to create a list of specific categories of Within these four broad categories , there are a number of more specific questions, the answers to which will guide the Banking Department in the formulation of its proposed policy statement on CRA and any subsequent regulations . -2 44 companies should be taken into account in evaluating the bank's CRA performance ; whether , at the conclusion of a CRA examination , the Department's tentative findings should be reviewed with the bank , and the bank afforded an opportunity to be heard with respect to such findings prior to their adoption by the Department ; whether , and to what extent , the Banking Board should exercise its authority to expand the list of applications the evaluation of which must take into account a bank's CRA performance ; whether , in passing upon applications for regulatory approval subject to CRA , the Department should take into account both the institution's current CRA rating as well as its rating for previous years ; whether it is appropriate to establish a so-called " safe harbor " in connection with the evaluation of applications for regulatory approval for banks which have achieved an outstanding ( " 1 " ) rating for a period of at least 3 years preceding such application ; whether the Department should encourage community group participation in its evaluations of CRA performance by establishing a formal community group comment period for each individual bank and by publishing CRA ratings on a quarterly basis ; and whether the Department should accept the appropriate federal bank regulatory agency's annual CRA examination report in lieu of requiring banking organizations with assets of less than $ 100 million to submit responses to the Banking Department's Annual CRA Information Request . BACKGROUND The federal Community Reinvestment Act was enacted by Congress in 1977 . -3 45 federal act and the state act are collectively referred to herein as the " Act " or " CRA " ) . The Act is designed to encourage banks to help meet the credit needs of their local communities , including low and moderate income neighborhoods , consistent with the safe and sound operation of those banks . The original sponsors of CRA were primarily concerned with the exportation of local deposits which , they argued , threatened the health and vitality of local neighborhoods . Data presented to the Committee on Banking , Housing and Urban Affairs ( 95th Congress , ist Session ) indicated that many banks exported to other neighborhoods ninety percent or more of the deposits received locally , while at the same time denying loans to qualified residents living in the neighborhoods from which such deposits were exported . The sponsors of CRA believed that banks identified certain limited neighborhoods in which to lend and that their failure to serve qualified borrowers in excluded areas contributed to the decline of those areas . Many banks and regulators opposed adoption of CRA grounds that the Act would result in credit allocation and would therefore interfere with legitimate private credit decisions . a result , CRA struck a compromise by requiring regulators to encourage banks to meet the credit needs of their entire communities but not directing banks to make specific investments or target specific lending . Implementation of the federal CRA is shared by the four federal regulators and the state CRA in New York is implemented by -4 46 The Act directs the regulators to assess the Banking Department . each bank's CRA record , which is accomplished through the examination process , and to take such record into account when considering whether to approve a number of expansion-related applications . The regulators may , but are not required to , reject an application if a bank fails to demonstrate that it has satisfied the requirements of CRA . New York and federal regulations require banks to delineate the geographic areas which constitute their " communities " " service areas " , to develop and or keep statements which identify the services offered by the bank , to maintain a public comment file , to post a public notice in each community which bank's branch alerts the to the CRA responsibilities , and to make public a portion of their CRA evaluations by their regulators . The federal regulators have issued several joint statements to provide guidance concerning CRA compliance . The statements include the " Statement of the Federal Financial Supervisory Agencies Regarding the Community · Reinvestment Act " , the " Interagency Questions and Answers About Community Reinvestment " , and the " Uniform Interagency Community Reinvestment Act Final Guidelines for Disclosure of Written Evaluations and Revised Assessment Rating System" . These statements provide useful guidance by articulating -5 47 In August 1989 Congress amended the federal CRA as part of the Financial Institutions Reform , Recovery , and Enforcement Act of 1989 ( " FIRREA " ) . the federal The amendments provided for public disclosure of regulators ' performance under CRA . written evaluations of each bank's In New York , CRA ratings and summary assessments have been made public since 1984 . The amendments also reduced the number of performance ratings from five to the current four ratings , " outstanding " , " satisfactory " , " needs to improve" and " substantial non-compliance" . In 1990 , New York also reduced its number of performance ratings from five to four to be consistent with the federal ratings . Finally , in December 1991 , the Federal Financial Institutions Examination Council issued a CRA policy which addressed the need for banks to analyze at least annually for CRA purposes the geographic distribution of their lending . tried independently to assess community needs to supplement bank lending efforts . In 1980 , the Board of Governors of the Federal Reserve System ( " FRB " ) established a Community Affairs Program to develop expertise in the methods and techniques of sound community development lending . ( " FDIC" ) The Federal Deposit Insurance Corporation has a similar program . The FRB also contacts community groups during the CRA examination process to assess the community's own perception of its credit needs . Soon after CRA was adopted , the New York State Banking Department established the Community Reinvestment Monitoring Unit , which is part of the Consumer Services Division . The unit is -6 1 48 generally responsible for evaluating bank CRA efforts and must make recommendations on all applications which contain a CRA component . In addition , the Department's Urban Analysts , as well as senior policy personnel , meet with community groups on an ongoing basis to assess community credit needs independent of the data submitted by banks . Regulators have also acted to establish incentives for strong CRA performance . From 1985 to 1988 , New York Banking Board General Regulations Part 88 granted banks the authority to invest in real estate equity and rewarded a strong CRA performance by tying such authority to a bank's CRA rating . ' The permissible amount of the investment depended upon the bank's CRA rating . Discussions with banking industry representatives suggest that the objectives of the regulations were not fully realized because the banks were concerned that the federal regulators would act to prohibit such direct real estate investments on safety and soundness grounds . A recently enacted federal law , the Bank Enterprise Act ( " BEA" ) , which comprises Sections 231-234 of the Federal Deposit Insurance Corporation Improvement Act of 1991 , offers banks an incentive to lend and/ or provide certain services in distressed communities . The BEA provides for a reduction in deposit insurance 1 -7 49 assessments for banks that make certain loans in low- income areas or to banks that offer low-cost banking services to low- income persons . QUESTIONS FOR PUBLIC COMMENT Question 1 . Whether to create a list of specific categories of investments , services and activities which fulfill the purpose of CRA and whether to create a category of " Special CRA Products" which will entitle the offering bank to substantially increased CRA credit . provide a greater range of opportunities for banks to satisfy their CRA obligations . This expanded list is expected to be of particular usefulness to the " wholesale" banks in New York which , because of the nature of their businesses , have had in the past a limited range of CRA opportunities . While the investments and services set forth on the list are available to " retail" banks as well , it remains the expectation of the Banking Department that the " retail" banks will continue to meet their CRA obligations principally by making credit available , either directly or through community development corporations , to all residents of their service areas , including low and moderate income persons . 2 -8 50 list is merely representative of the types of activities which qualify for CRA credit . It is not an exclusive list ; nor are banks required to engage in any of the activities set forth on the list . Each bank must decide for itself how it will satisfy the requirements of CRA , consistent with its own particular business objectives and consistent with safe and sound banking practices . CRA must be interpreted to permit banks with different business plans to meet CRA objectives in ways that are consistent with such business plans . List of Specific Investments Section 28 -b of the Banking Law identifies twelve factors that -9 51 for housing , small businesses or small farms . The Superintendent may also consider a bank's financial condition in relation to its ability to meet its community's needs and any other factors that reasonably bear upon the extent to which the bank is helping to meet the credit needs of its entire community . The Department believes that the broad language of CRA permits consideration of a wide range of activities , services and investments in addition to direct lending . The Department is considering further defining and expanding performance the factors provide to additional guidance . Traditionally , banks have been primarily involved in activities which employ direct lending as a means to fulfill their CRA responsibilities . In years , recent however , alternative mechanisms , often in joint venture or consortium form , have been successfully utilized in New York . banks can participate in the The Department believes that creation of such alternative mechanisms and invest in them to accomplish their CRA goals . The activities , services and investments that the Department proposes to further define and clarify eligibility for CRA credit include the following : investments in or loans to community 3 -10 52 helping to meet the credit needs of low and moderate income persons ; investments in the securities of , or grants to , community development finance intermediaries or consortia serving primarily low and moderate income neighborhoods ; " investments in state and local government agency housing bonds or other bonds that benefit low and moderate income areas ; charitable contributions or grants that specifically aim at helping low and moderate income persons origination of or participation in low and moderate income housing , community or economic development loans , or participations in such loans or loan pools from other institutions or nonprofit community - based development corporations ; ' origination of or participation in SBA - guaranteed loans or loan pools , MESBICS, FmHA - guaranteed farm , business or housing loans , or FHA - insured loans ; origination of or participation in economic development agency - guaranteed loans ; provision of bridge financing to small businesses ( including minority vendors ) that provide goods or services on a contractual basis to governmental entities and bridge financing to community groups the projects of which are approved for public financing but awaiting receipt of financing ; the provision of pro-bono financial advice to financially distressed municipalities and school boards and other political subdivisions which serve low and moderate income areas ; providing loans , grants and/ or pro-bono financial and/ or legal advice to non-profit organizations , community groups and small businesses that provide services to low and moderate income areas ; Community For example , Preservation Corporation , Community Lending Corporation and Neighborhood Housing Services of New York . 5 For example , see the two programs referred to above in footnote 3 . -11 53 providing loans , grants and/ or pro-bono financial and / or legal advice to non-profit health care facilities , including clinics , hospitals and long term care facilities for the elderly , serving primarily low and moderate income neighborhoods ; providing loans , grants and / or pro-bono financial and/ or legal advice to non-profit job training facilities that serve primarily low and moderate income persons ; and providing loans , grants and / or pro-bono financial and / or legal advice to non-profit day care facilities that serve primarily low and moderate income neighborhoods . Special CRA Products The Banking Department believes that , among the many investments and services by which banks may appropriately satisfy their CRA obligations , there are certain such investments which are of such current critical importance that a special category of investments should be identified and created . Therefore , the Banking Department proposes to establish a category of " Special CRA Products" which , if offered , will entitle substantially enhanced CRA credit . Question 4 on page 20 below for " enhanced " CRA credit to be offered . ) the offering bank to ( See the analysis relating to аa discussion regarding the These products are : the development and implementation of affordable housing initiatives, which should include the consideration of alternative underwriting standards and provisions for retaining an appropriate amount of such loans within the By " lifeline" , the Department means an account with savings and checking features which provides for a minimum number of monthly transactions at a nominal cost . -12 54 lending banks ' portfolios ;? the maintenance of branches ( including mobile branches ) in low and moderate income neighborhoods and the maintenance of ATM machines at such branches and at other non-bank locations ; investment in joint venture projects with state economic development agencies ; investment in the equity capital of " community " banks or banks which are owned or controlled by members of minority groups which are located in and which serve primarily low and moderate income neighborhoods ; s and 7 Initiatives which will enhance the availability of mortgage financing to increase private homeownership are central to any serious CRA effort . The Department believes that much more needs to be done in this area , and that much more can be done without violating safety and soundness standards . For example , we believe that the standard housing debt and total debt to gross income ratios , taken alone , may not be valid indicators of a borrower's ability and/ or willingness to repay a home mortgage loan . This is especially true in the New York City and the surrounding metropolitan housing markets , where housing costs often exceed 28 % of gross income and total debt often exceeds 33 % of such income . Indeed, the most anomalous circumstance frequently exists in which renters who can demonstrate years of consistent responsible payment of rent in excess of 28 % of gross income find themselves unable to qualify for a home mortgage, even when the total housing costs ( including the mortgage payments ) may be less than the rental payments ( with or without considering the tax benefits of home ownership ) . Other efforts should be made to provide financing for a portion of the traditional " down payment " . Banks could participate in affordable housing initiatives either directly or through consortia . The Banking Department discussed this issue in detail in a letter , dated December 9 , 1991 , from the Superintendent addressed to the Chief Executive Officers of all New York state-chartered banks, a copy of which letter is attached hereto as Appendix A. The Department believes that it is unrealistic at this time to expect any appreciable number of existing banks to establish new brick and mortar facilities in low and moderate income neighborhoods . However , there is the greater possibility that " community banks " or other small banks formed to serve low and moderate income communities will increase in number . The larger banks can greatly assist the efforts of these smaller community banks or minority owned banks by investing in their equity capital and/ or by purchasing home mortgage loans originated by such smaller banks . -13 55 investment in the equity capital and/ or debt instruments of consortia owned by banks , insurance companies and other financial services providers which are organized for the purpose of making small business loans in low and moderate income communities .' Question 2 . Whether , and in what circumstances , the Banking Department should render its prior opinion as to the eligibility of specific investments and projects for CRA credit . We believe that there is a shortage in the availability of small business loans . Without providing herein a specific definition of " small business" , we propose that loans in amounts ranging from $ 50,000 to $ 300,000 be the focus of this initiative . of course , the size of the loans and other credit related terms would be established by the participating banks themselves, consistent with safety and soundness concerns and the needs of the borrowers . At least in the New York City market , few banks are in the business of offering these types of loans . There are several reasons for this . The loans tend to be costly to originate , costly to administer and inherently risky . Given these facts , it has proven difficult for individual banks to actively participate in the small business loan market , at least in New York City . the marketplace . Underwriting standards would emphasize prudence , and interest rates ( in the absence of government subsidy) would , from the borrower's perspective , seem high . The return on investment for the participating banks would probably be less than the average for its entire portfolio , but the risks of making small business loans, given the consortium structure , would be greatly reduced . And importantly , there would businesses . Perhaps second only to housing lending, the need for be a substantial increase in the availability of credit to small small business lending is most important to the revitalization of low and moderate income communities . -14 56 reviewed these requests on an informal basis and is now considering whether , and in what circumstances , the Department should render formal pre - investment opinions as to CRA qualification . The goal of a pre - investment qualification policy is to increase the overall investment by banks in low and moderate income communities. an activity or investment for which a pre- investment opinion is sought : ( 1) whether the proposed program primarily benefits low and ( 2) whether the proposed program or project is responsive to Department proposes to consider whether the proposed projects exhibit sufficient positive economic impact on a low or moderate income communities . the applicant solely as to whether or not the proposed investment would at its consummation entitle the bank which is the subject of the inquiry to CRA credit . any recommendation or The letter would specifically disclaim endorsement with respect to the appropriateness , suitability or creditworthiness of the proposed -15 57 Question 3. Whether separate standards should be adopted for retail and wholesale banks respecting the delineation of their service areas for CRA purposes . will be evaluated for CRA purposes . that a bank's community consists Federal regulations provide of the contiguous areas surrounding each office or group of offices , including any low and moderate income neighborhoods in those areas . Existing boundaries such as those of standard metropolitan statistical areas or counties in which the bank's office or offices are located may also be used to delineate its community . In addition , a bank may choose to use as its service area its effective lending territory , which is defined as that local area or areas around each office or group of offices where it makes a substantial portion of its loans . Finally , a bank may use any other reasonably delineated local area that meets the purposes of CRA and does not exclude low and moderate income areas . The reasonableness of the delineation is reviewed by the appropriate regulator . It has been maintained that some banks either unjustifiably narrow their delineations and exclude low income neighborhoods or designate such large areas that attention to low income areas suffers . In addition , others have claimed that banks have been required unfairly to include low income areas in their community -16 58 delineations even though they have no branches located in those areas . To address these issues , the Department is considering revising the manner in which service area delineations are made , for both wholesale and retail banks . Wholesale banks In a 1990 comment letter submitted to the FRB , two wholesale banks stated that the typical wholesale bank community includes one or more business districts and a few upper- income neighborhoods . The comment stated that these areas properly constitute the wholesale bank's delineated area because that is in fact where most of the bank's borrowers are located . Accordingly , those banks proposed that " the community delineation factor be revised to recognize that wholesale institutions may have CRA service areas which lie outside or beyond their delineated communities but within the same municipality . " The Department believes this proposal has merit and has favorably viewed CRA investments by wholesale banks in community development projects which are outside the institution's effective lending territory , but are within the scope of its larger community responsibility . We propose to formally adopt this approach with regard to wholesale banks . Retail banks Retail banks have questioned the inclusion of low and moderate income areas in such banks ' community delineation when the banks have no branches located in those areas . Specifically , the question has arisen as to whether banks which have a presence in Manhattan but do not have branches north of midtown must include -17 59 low income delineations . areas in northern Manhattan in their community In evaluating the reasonableness of retail banks ' service area delineations , the Department is considering the extent to which the coverage of a retail bank's service area is affected by the presence or absence of geographically proximate competing Stated another way , the scarcity of competing institutions may effectively enlarge a retail bank's service area well into contiguous underserved locations . For example , in cases involving metropolitan areas in New York State , the Department is considering the appropriateness of recognizing the expansion of service areas by banks located in the central business districts to encompass underserved areas of the same municipality on the theory that a substantial portion of the banking business conducted by residents of underserved areas of the municipality is conducted at branch locations near such persons ' places of employment , which are likely to be in the central business districts . satisfy Banking Department concerns regarding breadth of coverage , the Department would insure that the low and moderate income areas within such service areas are the principal beneficiaries of CRA investment within such service areas . Question 4 . Whether , in an effort to reduce subjectivity in evaluating CRA compliance , the Banking Department should establish a quantitative system to evaluate compliance with CRA . -18 60 The Department's examination process is the cornerstone of its enforcement program . One major shortcoming of the CRA examination process , however , is the scarcity of quantitative standards by which to measure CRA performance . Without objective , quantifiable standards , the bank examiner's task of analyzing CRA compliance relies far too heavily on subjective judgments . In addition , the current subjective nature of the CRA examination makes it difficult for banks to predict reasonably their ratings , or to predict reasonably the manner in which the regulators will view their CRA The Department performance in the context of an application . believes that a bank compliance officer should be able to perform a CRA self -assessment and reach a reasonable conclusion as to how the bank examiner will evaluate the bank's CRA record . Το increase the level of predictability , a CRA evaluation system which places greater reliance on quantitative analysis is being considered . " The proposed quantitative system would utilize CRA investment targets which , if such targets were met , would comprise a significant component of an institution's ultimate CRA rating . The Department is considering a proposal in which a bank's annual CRA rating would be derived in large part by measuring its total assets invested in CRA qualified activities 10 -19 against its deposit 61 liabilities . A significant portion of the CRA rating would be extrapolated from a numerical computation , which computation would make use of raw data reflecting the bank's actual CRA activities and its deposit liabilities for the year to which the computation relates . 4 rating system would be retained . In order to receive a specific CRA rating ( for example , a " 1 " or " outstanding" rating ) , a bank would ordinarily be required to invest a minimum specified amount of its assets in CRA related activities . Not all CRA -related investments would receive equal weight . For example , the " Special CRA Products " described on pages 12 through 14 would receive substantially greater or " enhanced " credit . CRA In addition , activities and investments which have a direct ameliorative impact on low and moderate income communities ( such as housing finance , job training activities , small business lending and other similar community development activities ) would be accorded greater weight . In-kind CRA benefits provided pro - bono by banks would be valued at the bank's cost of providing such benefits and would be weighted accordingly . 11 -20 1 Ég 62 with information concerning the relative importance of direct impact lending and investment activities and other activities which are more auxiliary to CRA . The Department is seeking comment on the general issue of the advisability of adopting a quantitative evaluation system , as well as on the more specific issues related to the most appropriate methodology which might be employed in devising such a system . In addition , the Department seeks comment on the advisability of ( i) allowing a bank's required CRA performance to be adjusted due to the asset size or financial condition of the bank and ( ii ) making provision in the CRA regulations which would allow for flexibility when general market conditions inhibit banks from meeting the CRA targets . Department recognizes that this may impose additional recordkeeping responsibilities on banks and believes that the cost of such additional recordkeeping must be weighed against the benefits thereof . Comment is requested with respect to the costs which may be associated with these recordkeeping requirements . Question 5 . Whether , in the case of bank holding -21 63 bank holding company structure , a bank should receive CRA credit for the activities of its affiliates not subject to CRA if the activities would have entitled the bank to CRA credit had such activities been performed in the bank's service area by the bank itself . The point has been made that if a bank initiates CRA activities and investments through , for example , a community development corporation or other affiliate , then the bank should receive CRA credit for this activity . The Department concurs in such an approach and proposes to give credit to the bank for investments and activities actually performed by an affiliate thereof which , if performed by the bank directly , would receive CRA credit . Question 6 . Whether , at the conclusion of a CRA examination , the Department's tentative findings should be reviewed with the bank, and the bank afforded an opportunity to be heard with respect to such findings prior to their adoption by the Department . reports of their CRA activity and the Department conducts on-site and off-site CRA examinations in order to arrive at numerical CRA ratings which are assigned annually to each bank . CRA examinations are conducted by examiners in Community Reinvestment Monitoring Unit . These examiners assisted by the Department's Urban Analysts who meet with many community group representatives on an ongoing basis . As part of the examination process , examiners conduct a so-called " exit meeting" with banks upon the conclusion of the examination at which the examiner identifies for the bank , among -22 64 other things , the weaknesses in the bank's CRA program . The Department then assigns a numerical rating which is sent to the bank along with a copy of the Department's report of examination . The bank must present the report of examination and the numerical rating to its board of directors at the board's next meeting . the Department's formal adoption of such rating . This proposal would further the Department's goal of maintaining an ongoing dialogue with the banking industry on CRA matters , which the Department believes to be critical to the success of CRA . Question 7 . Whether , and to what extent, the Banking Board should exercise its authority to expand the list of applications the evaluation of which must take into account a bank's CRA performance . The Banking Department is considering expanding the types of applications that require a CRA review . For example , Section 28 -b currently provides that the Department must review a bank's CRA record when the bank makes application to open a branch office or to effect a business combination either through a merger or a purchase of assets . The Department is now considering whether to recommend to the Banking Board that it exercise its authority under Section 28 -b to expand the CRA review to include the following applications : ( a) conversions of savings banks and savings loan associations from mutual to stock form in cases in which -23 65 a failure to convert would not threaten the viability of the institution ; the formation of one bank holding companies pursuant to ( b) Section 143 -a of the Banking Law ; and other expansion-related applications . ( c) Extending consistent with CRA's coverage to additional the purposes of CRA , applications is namely to reaffirm the connection between a bank's receipt of regulatory approvals for expansion and its record of serving the credit needs of the communities it serves , consistent with its size , capital and resources . Question 8 . Whether , in passing upon applications for regulatory approval subject to CRĀ , the Department should take into account both the institution's current CRA rating as well as its rating for previous years . CRA requires the Department to assess a bank's record of helping to meet the credit needs of its entire community , including low and moderate income areas . The Department's review of the CRA portion of an application for regulatory approval includes consideration of the bank's entire CRA record , including the most -24 66 reflected in and subsequent to the last CRA examination . The Department is considering adopting a policy which would require a review of a bank's CRA performance for the 3 years preceding the filing of an application . Question 9 . Whether it is appropriate to establish a so-called " safe harbor " in connection with the evaluation of applications for regulatory approval for banks which have achieved an outstanding ( " 1 " ) rating for a period of at least 3 years preceding such application . performance would not constitute a bar to regulatory approval of an application . part of The goal would be to encourage banks to make CRA a their overall business plans and to strive for an outstanding CRA performance rather than an issue to be considered only in the context of pending applications and to encourage community groups to develop an ongoing dialogue with banks on matters relating to CRA . The Banking Department recognizes that the creation of a safe harbor may be perceived as having the effect of reducing community group involvement in the CRA process in some limited cases . However , the Department believes that if community group comment is solicited in a continuing manner and as part of the CRA examination process , as provided in Question 10 below , and not limited to the -25 67 application context , the value of community group comment will be greatly enhanced . Question 10 . Whether the Department should encourage community group participation in its evaluations of CRA performance by establishing a formal community group comment period for each individual bank and by publishing CRA ratings on a quarterly basis . In an effort to facilitate greater community group involvement on a continuing basis , the Banking Department proposes to ( i ) publish at the end of each calendar quarter a list of the banks for which the Banking Department will conduct a CRA examination during the next succeeding quarter and to ( ii ) formally solicit written comments from the community groups during such quarter with respect to such banks as part of the CRA examination process . A standardized questionnaire will be developed by the Banking comments : Therefore , the comments of the community groups will be specifically solicited and formally considered by the Banking Department in arriving at the annual CRA rating . which received a rating during the preceding quarter . Currently , community groups may obtain bank CRA ratings by filing a Freedom of Information Law Request with the Department's Public Information Officer . The Department believes that periodic publication of all ratings will be useful to community groups and may encourage ongoing dialogue between banks and the community . -26 68 Currently , community groups do not play an active role during the CRA examination process . Despite the fact that CRA ratings have been publicly available in New York since 1984 , this information has not been widely used to address particular bank deficiencies prior to the filing bank of applications for The Department believes that the role of regulatory approval . community groups can be meaningfully and responsibly expanded to encourage a continuing dialogue with banks on community credit needs . Question 11 . Whether the Department should accept the appropriate federal bank regulatory agency's annual CRA examination report in lieu of requiring banking organizations with assets of less than $ 100 million to submit responses to the Banking Department's Annual CRA Information Request . undue burden on small banks and that their ratings are unfavorably affected more by their inability to document their CRA performance than as a performances . result of While any the deficiencies Department in their believes actual that CRA adequate documentation is essential to enable it to examine a bank's CRA performance , the Department also supports eliminating requirements that tend to unreasonably duplicate a bank's compliance efforts . Accordingly , the Department is considering permitting small banks to achieve compliance with the Department's Annual Information Request reporting requirement in cases where the Department is provided with a copy of the bank's federal CRA examination report . -27 69 This proposal would eliminate a reporting requirement , not the requirement to comply with CRA . We believe that this proposal will not result in reduced CRA compliance because ( i ) banks in New York State with assets of $ 100 million or less tend to be " community banks" which make a large percentage of their loans in their service areas , ( ii ) the information reported on the federal forms will likely be sufficient to inform the Banking Department of any material CRA deficiencies which require further investigation and ( iii ) the Department will retain the authority to reimpose the reporting requirement banks which , based upon complaints received and upon our own analysis , appear to have reduced their commitment to CRA to a less than satisfactory level . -28 70 Appendix A CELSIOR STATE OF NEW YORK BANKING DEPARTMENT DERRICK D. CF.PH.AS SUPERINTENDENT OF BANKS December 9 , 1991 , TO THE CHIEF EXECUTIVE OFFICER OF THE INSTITUTION ADDRESSED : Since the release of the Home Mortgage Disclosure Act data last month , a great deal of concern has been expressed about the findings that minorities were rejected for mortgage applications at a rate far greater than that of whites , even when both white and minority applicants had similar incomes . While we recognize that there are legitimate factors in addition to income , such as debt ratios , credit history and employment , that play a significant role in banks' decisions on mortgage applications , we believe that it would be helpful if banks were to consider taking constructive measures in this area . These would include re -examining your bank's underwriting standards , reviewing how these standards are actually applied to mortgage applicants, re - evaluating your community outreach programs and considering the offering of FHA loans . Underwriting Standards It might be helpful if banks reviewed their mortgage underwriting standards to make certain that their requirements are not more restrictive than are reasonable and necessary for prudent lending . This is particularly important for those loans intended to be kept in portfolios since they are not required to conform to secondary market guidelines . For example , among the factors that might be considered are whether there can be more flexibility regarding the sources of funds for down payments and closing costs, greater emphasis on the applicant's income stability rather than length of employment with a particular employer and permitting a higher than customary ratio of housing costs to gross income if the applicant has had a long and sustained good record on rent payments which exceeded such customary ratio . Applying Underwriting Standards The manner in which underwriting standards are applied is of vital importance for ensuring equitable treatment of all applicants . It might be useful in this regard to institute a procedure for a second review of all rejected applicants by a 71 2 senior bank officer before such applicants are denied financing to ensure that complete and careful consideration has been given to these applications . As you know , applications are often approved even when they do not , strictly speaking, meet a bank's formal standards , provided there are offsetting financial strengths . The applications which would otherwise be turned down should be analyzed as carefully as the approved applications to determine whether they too may have other favorable characteristics that would warrant approval. Community Outreach Programs Banks should re - evaluate their outreach programs to ensure that their local communities are made aware of the bank's interest in serving the credit needs of minority persons in these communities . This can be accomplished by : A Loans Consideration should be given to offering FHA loans . The limits on the maximum size of a loan which FHA will insure were increased last year and . we have been informed that FHA has substantially reduced the " red tape " and processing time for such loans . Because of FHA's low down payment requirements and more liberal terms , offering FHA loans could help attract creditworthy minority and lower income applicants . We realize that many banks are already engaged in some of these constructive activities and we appreciate such efforts to make equal credit opportunity a reality in New York State . hoped that the measures outlined in this letter will strengthen the belief that New York State - chartered institutions are actively seeking to serve the mortgage needs of all creditworthy applicants , including minority persons , in their local communities . Very truly yours , Denick Ashan 72 NEWS RELEASE New York State BANKING DEPARTMENT Contact : Mrs. Clare E. Sykes ( 212) 618-6620 Derrick D. Cephas Superintendent of Banks Two Rector Street New York , N.Y. 10006 NEW COMMUNITY REINVESTMENT ACT ( CRA ) POLICY IS OFFERED FOR PUBLIC COMMENT BY THE NEW YORK STATE BANKING DEPARTMENT A new proposal to promote and NEW YORK , September 9 , 1992 measure compliance of 168 FDIC - insured , state - chartered banks with New York's Community Reinvestment Act ( CRA ) was offered for public comment today by Superintendent of Banks Derrick D. Cephas . ( more ) 73 Page Two - CRA Reforms " As originally enacted , CRA was rather narrow in its scope . It was intended to counter the effects of disinvestment , inner - city in principally and " redlining " Mr. Cephas continued : neighborhoods. It has been expanded over the years, properly so we believe , to embrace a much wider range of issues relating generally to the availability of credit and other financial services to low and moderate income persons and the communities in which they live . As with any other instrument of government , community reinvestment is and should be a dynamic and evolving concept that is responsive to the changing -- within the bounds of legislative authority needs of society . " more The Banking Department is taking the unusual step of seeking public comment prior to publication of its formal regulations in an effort to fully inform the public as to the proposed reforms . Other key proposals include : ( more ) 74 Page Three CRA Reforms -- preparation of prior opinion letters as to the eligibility of specific investments and projects for CRA credit . consideration of both current CRA ratings and those of previous years in passing on bank organization applications that are subject to CRA review . END
@FedFRASER