Full text of Federal Reserve Bank of New York Circulars : 10462. Community Reinvestment Act

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FEDERAL RESERVE BANK
OF NEW YORK
Circular No. 10462 "I
June 20, 1991

[
COM M UNITY REINVESTM ENT ACT
REGULATION BB
Final Rule Regarding the Public Disclosure of

CRA Performance Evaluations and C RA Ratings
To All State Member Banks in the Second
Federal Reserve District, and Others Concerned:

Effective July 1, 1990, the Board of Governors of the Federal Reserve System, together with
the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the
Office of Thrift Supervision, issued a temporary rule to implement changes in the Community Re­
investment Act that were contained in Title XII of the Financial Institutions Reform, Recovery, and
Enforcement Act o f 1989. (That temporary rule was sent to you with our Circular No. 10361, dated
July 18, 1990.)
The Board of Governors has now issued, effective July 11, 1991, a final rule that amends its
Regulation BB, “Community Reinvestment,” and adopts, with only minor modifications, the re­
quirements in the temporary rule concerning the manner in which State member banks must make
their written CRA Performance Evaluation and CRA rating public. Following is the text of the state­
ment issued by the Board of Governors in this regard:
The Federal Reserve Board has announced new procedures for State member banks to follow re­
garding the public’s access to Community Reinvestment Act (CRA) Performance Evaluations and ratings.
The Board established these new procedures by amending its Regulation BB (Community Reinvestment).
The new procedures become effective July 11, 1991.
Currently, State member banks are required to place their CRA Performance Evaluation, which con­
tains the rating, in a public file within 30 business days of its receipt. The new procedures call for only
minor modifications to this rule.
The evaluations must be made available for public inspection, and copies must be provided to in­
terested parties for a fee not to exceed the cost of reproduction and mailing. The State member banks’
CRA Public Notices must be amended to reflect the availability of the evaluation and rating.
The final rule clarifies the point that a State member bank may, at its option, prepare a response
to the evaluation and make it available in the public comment file.

Enclosed is a copy of the text of the notice issued by the Board of Governors amending the
interim rule. The notice has been reprinted from the Federal Register o f June 12, 1991. Ques­
tions regarding this matter may be directed to our Compliance Examinations Department
(Tel. No. 212-720-5919).




E. G e r a l d C o r r ig a n ,

President.

Board o f G overnors o f the Federal R eserve S ystem

COMMUNITY REINVESTMENT
AM ENDM ENTS TO REGULATION BB

(Effective July 11, 1991)
FEDERAL RESERVE SYSTEM
12 CFR Part 228
[Docket No. R-0691]

Telecommunications Device for the
Deaf, a t (202) 452-3544, Board of
Governors of the Federal Reserve
System, Washington, DC 20551.
SUPPLEMENTARY INFORMATION:

Community Reinvestment Act

Background
Section 1212 of the FIRREA, Public
Federal Reserve System.
Law 101-73,103 Stat. 183, 511 (1989)
amended the CRA, Title VIII, Public Law
a c t i o n : Final rule.
95-128, 91 Stat. 1147 (12 U.S.C. 2901 et
s u m m a r y : The Board is amending its
seq.) to provide for written evaluations
regulation to implement changes in the
of an institution’s record of meeting the
Community Reinvestment Act of 1977
credit needs of its entire community,
(CRA) contained in Title XII of the
including low- and moderate-income
Financial Institutions Reform, Recovery neighborhoods. It also requires the
and Enforcement Act of 1989 (FIRREA). financial supervisory agencies to use a
This final rule establishes procedures
four-tiered descriptive rating system in
applicable to state member banks
their assessments of CRA performance
governing public access to CRA
of the institutions they supervise in
Performance Evaluations and CRA
place of the five-tiered numerical rating
ratings assigned by the Federal Reserve system in use prior to the amendment.
during the examination process.
FIRREA requires th$ public disclosure of
This final rule requires state member both the written evaluation and CRA
banks to place their CRA Performance
rating assigned for examinations
Evaluation and CRA rating in their
commenced on or after July 1,1990. In
public comment file (which they are
addition, it requires that each written
already required to maintain under
evaluation contain findings and
existing regulations) within 30 business conclusions with respect to each of the
days of receipt. State member banks
assessment factors designed to measure
must make the evaluation and rating
CRA performance. Finally, the written
available for public inspection and
evaluation must contain the institution’s
provide copies of the evaluation, upon
rating and a statement describing the
request, to interested parties. Banks may basis for the rating.
charge a reasonable fee for reproduction
Notwithstanding the public nature of
of the evaluation and mailing costs, if
the written evaluations, FIRREA
applicable. State member banks must
stipulates that the financial supervisory
also amend their CRA Public Notices to agencies maintain as confidential
reflect the public availability of the
information provided in confidence to
evaluation and rating.
the examiners by members of the public,
EFFECTIVE DATE: July 11,1991.
officers or employees of the institution,
or any other person or organization, as
FOR FURTHER INFORMATION CONTACT:
well as information the agencies believe
Janice Scandella, Review Examiner, at
is too sensitive or speculative for public
(202) 452-3946; for the hearing impaired
only, contact Dorothea Thompson,
disclosure. FIRREA also permits the
AGENCY: Board of Governors of the

PRINTED IN NEW YORK, FROM F E D E R A L

R E G IS T E R ,

agencies to provide information solely to
the examined institution when they
determine that doing so will promote the
objectives of the CRA.
On December 22,1989, the Federal
Financial Institutions Examination
Council (FFIEC) published for public
comment proposals to implement all
aspects of these amendments (54 FR
52914). The FFIEC received 129
comments from financial institutions,
the public, research organizations,
governmental agencies, and members of
the Congress. Based on review of the
comments received, the FFIEC adopted
the “Uniform Interagency Community
Reinvestment Act Final Guidelines for
Disclosure of Written Evaluations and
Revised Assessment Rating System’’.
See 55 FR 18163 (May 1,1990).
On June 28,1990, the Board, the Office
of the Comptroller of the Currency,
Federal Deposit Insurance Corporation,
and Office of Thrift Supervision,
published for public comment a joint
temporary rule implementing all aspects
of the FIRREA amendments to CRA (55
FR 26624). The agencies issued the
temporary rule to ensure that the
changes became effective by the
effective date mandated by the Act.
Although the temporary rule took effect
July 1,1990, the agencies requested
public comment prior to issuing a final
rule. The comment period ended on
August 27,1990.
Purpose
This final rule adopts, with only minor
modification, the requirements in the
temporary rule concerning the manner in
which state member banks must make
their written CRA Performance
Evaluation and CRA rating public. The
Federal Reserve intends this final rule to

VOL. 56, NO. 113, pp. 26901-02

For Regulation BB to be complete, retain:
1) Pamphlet effective November 6, 1987.
2) Amendments included in Joint Temporary Rule, effective July 1, 1990.
3) This slip sheet.
[Enc. Cir. No. 10462]




(OVER)

enhance the information available to the
public regarding the CRA activities and
performance of state member banks.
Each state member bank must place its
most recent CRA Performance
Evaluation containing its rating in its
CRA public comment tile, already
required by existing regulation, within
30 business days of receipt. Each state
member bank must also make the CRA
Performance Evaluation available, at a
minimum, in the public comment file at
the bank’s head office and, if applicable,
at a designated office located in each
additional delineated community. Each
state member bank must revise the CRA
Notice it is already required to maintain
in the public lobby of each of its offices,
other than off-premises electronic
deposit facilities, to inform the public of
the availability of the evaluation and
where it can be obtained. Each state
member bank must make copies of the
evaluation available upon request, and
may charge a fee not exceeding the cost
of reproduction and mailing (if
applicable).
Discussion O f Comment Letters
The Board received eight comments in
response to the temporary rule. Among
the issues raised by the commenters
was a concern that the language
contained in the temporary rule
authorizing banks to charge a
“reasonable fee not to exceed the cost of
reproduction and mailing (if applicable)”
would result in inadvertent violations of
the regulation since the term
“reasonable” is subject to interpretation.
One commenter sought to impose a
"safe harbor” provision authorizing a
$.10 per page copying charge and $2.00
mailing fee. After evaluating this
alternative, the Board determined that
establishing a set fee schedule is
unnecessary at this time and that the
“reasonable fee” language provides
sufficient guidance. The Board’s intent is
to ensure that no state member bank
charges unreasonable or exorbitant fees
for providing copies of the evaluations
to the public. This provision is similar to
the current provision regarding the CRA
statement. Since the regulation was
adopted in 1978,12 CFR 228.4(f) has
required that state member banks
provide a copy of the CRA statement to
the public upon request, and allowed
banks to charge a fee “not to exceed the
cost of reproduction." To the Board’s
knowledge this has not caused any
problems of interpretation.
A commenter advocated wider




availability of the evaluations
throughout the various communities an
institution might serve. In the temporary
rule the Board required that each state
member bank, at a minimum, place the
evaluation in the CRA public file at the
head office and at one designated office
in each local community. The Board
believes that this approach provides
adequate availability. Each state
member bank must keep a complete
CRA public file at its head office.
Additionally, if the bank has more than
one local community, it must keep those
materials relating to each local
community at a designated office in that
community. This ensures that, at a
minimum, a state member bank’s
written CRA evaluation and CRA rating
are available to the public at one
location in each designated local
community served by the bank and at
the head office. The bank’s head office
file must contain m aterials relating to all
local communities served by the bank.
Another commenter expressed
concern that the regulation required the
bank to place any prepared response to
the CRA evaluation in the public file.
This was not the intent of the temporary
rule. The final rule has been modified to
make clear that it does not require, but
merely permits, the bank to respond to
the CRA evaluation and place its
response in the public file should it so
desire. Paragraphs 228.5(a)(3) and
228.3(c)(3) of the rule have been revised
to eliminate any possible ambiguity in
the regulatory language. In responding
to a request by the public for a copy of
the CRA evaluation, the final rule also
allows a bank to include its written
response to the evaluation.
A commenter suggested that requiring
the CRA Performance Evaluation to be
placed in the public file within 30
business days of receipt failed to
provide banks with sufficient time to
formulate a response. The commenter
advocated extending the filing period to
90 days. The Board believes that the 30
business day period provides banks
with sufficient opportunity to respond to
the issues addressed in the evaluation.
Finally, a commenter advocated
exempting banks with less than $150
million in total assets from making the
evaluation available in a designated
office in each local community as well
as the head office. The CRA applies to
state member banks regardless of their
size. Therefore, the Board believes it is
inappropriate to tailor the regulation
along such lines.

Regulatory Flexibility Act
Pursuant to the requirements of the
Regulatory Flexibility Act, 5 U.S.C.
605(b), the Board certifies that this final
rule will have an insignificant economic
impact on small entities. This final rule
imposes only minimal costs on state
member banks, regardless of size.

List of Subjects in 12 CFR Part 228
Community development; Consumer
protection; Credit; Federal Reserve
System; Investments; Reporting and
recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the
preamble, part 228 of chapter I of title 12
of the Code of Federal Regulations is
amended as set forth below:
PART 228— [AMENDED]

Accordingly, the interim rule
amending 12 CFR part 228 which was
published at 55 FR 26624-26628 on June
28,1990, is adopted as a final rule with
the following changes:
1. The authority citation for part 228
continues to read as follows:
Authority: Community Reinvestment Act of

1977 [title VIII, Pub. L. 95-128,91 Stat. 1147 [12
U.S.C. 2901 et seq.)]; 12 U.S.C. 321, 325, 1814,
1816, 1828,1842.

2. In § 228.5, paragraphs (a)(3) and
(c)(3) are revised to read as follows:
§ 228.5 Files of public comments and
recent CRA statements.

(a) * * *
(3)
Any response to the comments
under paragraph (a)(1) of this section
that the bank wishes to make; and
* * * * *
(c) * * *
(3)
The most recent CRA Performance
Evaluation shall, at a minimum, be
available at the head office and at an
office in each local community so
designated under paragraph (c)(2) of this
section. The bank may respond to the
CRA Performance Evaluation and may
make the response available in the same
manner as the CRA Performance
Evaluation.
* * * * *
Board of Governors of the Federal Reserve
System, June 4, 1991.
William W. Wiles,
Secretary of the Board.
[FR Doc. 91-13662 Filed 6-11-91; 8:45 am]
billing code

6210-01-F