The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK
O F N EW YORK
Circular No. 8 2 6 7 1
February 1, 1978 J
COMMUNITY REINVESTMENT ACT OF 1977
Proposal to Develop Implementing Regulations
To A ll State Member Banks in the Second Federal
Reserve District, and Others Concerned:
Following is the text of a statement issued January 19 by the Board of Governors of the
Federal Reserve System, regarding plans for developing regulations to implement the Com
munity Reinvestment Act of 1977:
The Federal bank and thrift institution regulators today announced plans for developing regulations
to carry out the new Community Reinvestment Act (CRA ).
The Comptroller of the Currency (Supervisor of national banks), Federal Deposit Insurance Cor
poration (Federal supervisor of State chartered banks and savings banks that are not members of the
Federal Reserve System ), Federal Home Loan Bank Board (Supervisor of Federally chartered savings
and loan associations, and savings and loan holding companies), and Federal Reserve Board (Supervisor
of State member banks and bank holding companies) :
1. Announced they will hold a hearing in Washington, D.C., on March 15 and 16, and expect to
hold hearings in Atlanta, Boston, Chicago, Dallas and San Francisco, during the period March
20 to April 20, to receive suggestions from the public on how to implement the new law.
2. Invited the public to submit written comment through March 8. on any aspect of interest to
individuals or organizations, but particularly to give the agencies responses to a list of questions
on subjects to be addressed in implementing regulations the four agencies will write.
The questions are contained in the joint announcement by the four Federal regulators [reprinted
herein].
The CRA is part (Title V III) of the Housing and Community Development Act (P.L. 95-128)
signed into law October 12, 1977. Among other things, it requires the four Federal regulators to have
implementing regulations in force not later than November 6, 1978.
The CRA requires that the Federal agencies:
—encourage bank and thrift institutions that they supervise to meet the credit needs of their
entire community, including low- and moderate-income neighborhoods, consistent with safe
and sound operation of the lending institutions, and
—take into account the lenders’ records in meeting this standard in assessing applications by
the lenders to open new offices under a Federal charter, obtain Federal deposit insurance,
establish branches, carry out mergers and the like.
Printed on the following pages is an excerpt from the Federal Register of January 25,
1978, containing the text of an announcement made by the four supervisory agencies advising
of public hearings to be held on this matter, the text of the Community Reinvestment Act, and
several questions that the agencies would like to have addressed by those commenting on the
Act. Comments should be submitted by March 8, 1978, and may be sent to our Consumer
Affairs and Bank Regulations Department.
P a u l A. V olcker ,
President.
[6210-01 ]
BOARD OF GOVERNORS OF fHE
FEDERAL RESERVE SYSTEM
[12 CFR Ch. II]
[4810-33 ]
DEPARTMENT OF THE TREASURY
Comptroller of tho Currency
[12 CFR Ch. I]
[6714-01 ]
FEDERAL DEPOSIT INSURANCE
CORPORATION
[12 CFR Ch. Ill]
[6720-01 ]
FEDERAL HOME LOAN BANK BOARD
[12 CFR Ch. V ]
[FRB Docket No. R-0139]
COM M UNITY REINVESTMENT A C T OF 1977
Joint Hearing
AGENCY: Federal R eserve System ,
C om ptroller o f th e Currency, Federal
D ep osit Insurance C orporation, and
F ederal H om e Loan Bank Board.
ACTION: N otice o f Joint hearing.
SUM M ARY: T h e C om m unity R ein
vestm en t A ct o f 1977 (th e "CRA”) re
quires each appropriate Federal fin an
cial supervisory agency to use its au
th ority w hen exam ining financial in
stitu tion s, to encourage such in stitu
tion s to help m eet th e credit needs of
th e local com m unities in w hich th ey
are chartered con sisten t w ith th e safe
and sound operation o f su ch in stitu
tions. T h is docum ent announces a
join t hearing to be held to aid th ese
agencies in th e preparation o f regula
tion s prescribed by th e "CRA”. T h e
docum ent also sets forth questions th e
agencies are especially interested in
having addressed in w ritten and oral
subm issions.
DATES: Hearing: M arch 15 and 16,
1978, at 10 a.m. Comments: D ue on or
before M arch 8, 1978. T h e agencies
also exp ect to hold hearings in th e fo l
low ing cities betw een M arch 20 and
April 20, 1978: A tlanta, B os Lon, Chica
go, D allas, and San Francisco. D etails
regarding exact tim es and places will
be announced later.
A D D R ESSES: H earing location: Con
ference R oom E, Terrace Level, Feder
al R eserve M artin Building A nnex,
20th and C S treet NW „ W ashington,
i> .c. Com m ents: Send to Secretary,
Bokrd of G overnors o f th e Federal R e
serve S ystem , W ashington, D.C. 20551.
FO R
FU R T H E R
CONTACT:
IN FO RM ATIO N
R obert J. Lawrence, D ep u ty S ta ff
D irector for M anagem ent, Federal
R eserve System , W ashington, D.C.
20551, phone 202-452-3766.
SU PPLEM EN TA R Y INFORM ATION:
On October 12, 1977, th e President
signed into law th e H ousing and Com
m unity D evelopm ent A ct of 1977 (Pub.
L. 95-128). T itle VIII of th a t A ct is th e
C om m unity R einvestm ent A ct of 1977
("the CRA”). T h e CRA requires th at,
in connection w ith its exam ination of
a financial in stitu tio n w ith in its juris
diction, th e Board of G overnors o f th e
F ederal R eserve System , th e Comp
troller of th e Currency, th e Federal
D ep osit Insurance Corportion, and th e
Federal H om e Loan Bank Board (col
lectively referred to as "the agencies”)
sh all assess th e institution's record of
m eetin g th e credit needs o f its entire
com m unity, including low- and m oder
ate-incom e neighborhoods, con sisten t
w ith th e sa fe and sound operation of
th e institution, and th a t th e appropri
ate agency take th a t record into ac
count in its evaluation o f any applica
tion by th e in stitu tio n for a charter,
deposit insurance, branch o f o th er de
posit facility, office relocation, merger,
or acquisition o f bank or savings insti
tu tio n shares. P ursuant to th e author
ity contained in sectio n 806 o f th e
CRA, th e agencies w ill prescribe regu
lation s to carry Out th e purposes 6f
th e CRA to take e ffe c t no later th an
Novem ber 6, 1978.
O n b eh a lf o f th e four agencies,
n otice is hereby given th at, to aid in
th e preparation of th o se regulations, a
hearing w ill be held before representa
tives o f th e agencies in conference
room E on th e terrace level of th e F ed
eral R eserve’s M artin Building A nnex,
20th and C S treets NW ., W ashington,
D.C., on M arch 15 and 16, 1978. T he
proceedings w ill com m ence at 10 a.m.
on both d ates and w ill consist of pre
sen ta tio n s o f sta tem en ts in oral or
w ritten form . In terested persons are
invited, how ever, to subm it w ritten
com m ents regardless o f w hether th ey
intend to participate in th e hearing.
T h e agencies also ex p ect to hold
hearings in th e follow ing cities be
tw een M arch 20 and April 20. 1978: A t
lanta, B oston, Chicago, D allas, and
San Francisco. D etails regarding exact
tim es and places w ill be announced
later.
A ny person desiring to subm it writ
ten com m ents, give testim ony, present
evidence, or otherw ise participate ih
th e proceedings should file w ith th e
Secretary, Board o f G overnors of th e
Federal R eserve System , W ashington,
D.C. 20551, on or before March 8,
1978, four copies o f th eir w ritten com
m en ts or a w ritten request containing
a statem en t of th e nature of th e p eti
tioner's in terest in th e proceedings.
th e city in w hich petitioner w ishes to
testify , th e len g th of tim e requested
for oral presentation, a sum m ary of
th e m atters concerning w hich th e pe
tition er w ishes to give testim ony or
subm it evidence, and th e nam es and
id en tify o f w itnesses w ho propose to
appear. Copies of all w ritten subm is
sions w ill be distributed by th e Board
of G overnors to each of th e other
agencies and w ill be m ade available for
public inspection and copying upon re
quest in accordance w ith th e agencies’
respective rules regarding availability
o f inform ation. All m aterial subm itted
should refer to D ocket No. R-0139.
To aid persons in preparing w ritten
com m ents and testim ony, th e tex t Of
th e CRA 1s reprinted below, follow ed
by questions th a t th e agencies are es
pecially interested in having addressed
in w ritten and oral subm issions.
T itl * V III—CoMMTTwmr R m v B T ioarr
Sac. 801. This title may be cited as the
“Community Reinvestment Act of 1977.”
Sac. 802. (a) The Congress finds that—
(1) Regulated financial institutions are re
quired by law to demonstrate that their de
posit facilities serve the convenience and
needs of the communities in which they are
chartered to do business:
(2) The convenience and needs of commu
nities include the need for credit services as
well as deposit services: and
(3) Regulated financial institutions have
continuing and affirmative obligation to
h e lp m e e t t h e c r e d it n e e d s o f t h e lo cal c o m
m u n itie s in w h ic h t h e y a r e c h a r te r e d .
(b ) I t is t h e p u rp o s e o f t h is t it l e to re q u ire
e a c h a p p r o p r i a te F e d e r a l f in a n c ia l s u p e rv i
s o ry a g e n c y to use its a u th o r i t y w h e n e x a m
in in g f in a n c ia l in s titu tio n s , to e n c o u ra g e
s u c h i n s t it u t io n s to h e lp m e e t th e c r e d it
n e e d s o f t h e local c o m m u n ite s in w h ic h
t h e y a r e c h a r t e r e d c o n s is te n t w ith th e s a fe
a n d so u n d o p e r a tio n o f s u c h in s titu tio n s .
S ec . 803. F o r th e p u rp o s e s o f th is t i t l e —
(1) T h e te r m " a p p r o p r ia t e F e d e r a l f in a n
cial s u p e rv is o ry a g e n c y ” m e a n s —
(A ) T h e C o m p tr o lle r o f t h e C u r r e n c y w ith
r e s p e c t to n a tio n a l b a n k s;
(B ) T h e B o a rd o f G o v e rn o rs o f t h e F e d e r
al R e s e rv e S y s te m w ith r e s p e c t to S ta te c h a r t e r e d b a n k s w h ic h a r e m e m b e rs o f t h e
F e d e r a l R e s e rv e S y s te m a n d b a n k h o ld in g
c o m p a n ie s;
(C ) T h e F e d e r a l D e p o s it I n s u r a n c e C o rp o
r a ti o n w ith re s p e c t to S t a te - c h a r t e r e d b a n k s
a n d sa v in g s b a n k s w h ic h a r e n o t m e m b e rs
o f t h e F e d e r a l R e s e rv e S y s te m a n d t h e d e
p o s its o f w h ic h a r e in s u r e d by t h e C o r p o r a
tio n ; a n d
(D ) T h e F e d e r a l H o m e L o a n B a n k B o a rd
w ith r e s p e c t to i n s titu tio n s t h e d e p o s its o f
w h ic h a r e in s u r e d b y t h e F e d e r a l S a v in g s
a n d L o a n I n s u r a n c e C o r p o r a tio n a n d to sa v
in g s a n d lo a n h o ld in g c o m p a n ie s;
(2) T h e te r m " r e g u la te d fin a n c ia l i n s t it u
t i o n ” m e a n s a n In s u re d b a n k a s d e fin e d in
s e c tio n 3 o f t h e F e d e ra l D e p o s it I n s u r a n c e
A c t o r a n in s u re d i n s t it u t io n as d e fin e d in
s e c tio n 401 o f t h e N a tio n a l H o u s in g A ct;
and
(3) T h e te r m " a p p lic a tio n fo r a d e p o s it f a
c ility ” m e a n s a n a p p lic a tio n to t h e a p p r o p r i
a te F e d e r a l f in a n c ia l s u p e rv is o ry a g e n c y
o th e rw is e r e q u ir e d u n d e r F e d e r a l law o r
r e g u la tio n s t h e r e u n d e r f o r —
FEDERAL REGISTER, V O L 43, NO . 17— WEDNESDAY, JA N U A R Y 25, 1973
credit and dem ands for credit? To
9. W hat criteria should be used in
w hat ex ten t should th e lenders’ cred determ ining w hether an institution is
itw orthiness standards influence th e
helping to m eet com m unity credit
definition and m easurem ent of credit
needs "consistent w ith th e safe and
needs?
sound operation” of th a t institution?
2. D o com m unity credit needs in
10. How should th e agencies assess
clude financing needs of S ta te and
th e record of institutions w ith branch
local governm ents and other local
offices, of affiliated institutions w ithin
public agencies?
a holding com pany, or of affiliated in
3. How should th e credit needs of
stitu tio n s not in a holding company?
th ose w ho have access to regional or
How should th e records of individual
national credit m arkets, and th ose
offices be taken into account in assess
who do n ot have such access, be taken
ing th e parent or affiliated company?
into account in determ ining com m uni
11. In m aking th e assessm ent, w hat
ty credit needs?
consideration, if any, should be given
4. To w hat ex ten t do com m unity
to th e in stitu tio n ’s costs and sources
credit needs include th e credit needs
o f funds? To its rate of return on in
of borrowers operating w ithin m any
com m unities such as th e Federal gov vestm ent? To its liquidity?
12. For in stitu tion s w ith foreign of
ernm ent and large m anufacturing and
fices, how should th e ex ten t of foreign
retail firms?
C.
Assessing an in stitu tio n ’s record. loans and foreign deposits be taken
into account, if at all, in th e assess
Section 804 of th e Act requires th e
ment?
agencies "to assess” an in stitu tio n ’s
record in m eeting com m unity credit
D. Evaluating applications. Section
needs.
804 of th e Act inquires th e agencies to
1. W hat reporting or record keeping
take an in stitu tio n ’s record into ac
by financial institutions is necessary
count in evaluating its applications.
to carry out th e purposes o f th e Act?
2. To w hat ex ten t should th e agen
1. W hat w eight should be given to
cies consider lending policy statem en ts
th e record of th e institution in m eet
of a financial insitution?
ing com m unity credit needs compared
3. In th e assessm ent process, should
to th e w eight given other factors such
th e sam e standards bp applied to na
as com petition, safety and soundness,
tional banks; State-chartered banks
and other m anagerial and financial
w hich are m em bers of th e Federal R e
factors?
serve System ; bank holding companies;
2. Under w hat circum stances, if any,
State-chartered banks w hich are not
should the agencies deny an applica
m em bers of th e Federal R eserve
tion? Approve an application on the
S ystem and th e deposits of w hich are
condition th a t th e institution improve
insured by th e Federal D eposit Insur
its record? G rant unconditional ap
ance Corporation; savings banks w hich
proval?
are n ot m em bers of th e Federal R e
serve S ystem and th e deposits of
E. Other adm inistrative matters. 1.
w hich are insured by th e Federal D e
S ection 802(b) of th e Act indicates
posit Insurance Corporation; in stitu
th a t its purpose is to require th e agen
tions th e deposits of w hich are insured
cies to "encourage” institutions to
by th e Federal Savings and Loan In
Q uestio n s
help m eet com m unity credit needs. In
surance Corporation; and savings and
addition to decisions on applications,
A. Community. Section 804 of th e
loan holding companies?
how may or should th e agencies use
Act requires th e A gencies to assess an
4. Should th e agencies apply th e
their authority to "encourage” in stitu
in stitu tio n ’s record of m eeting th e
sam e standards in assessing th e re
tions?
credit needs "of its entire com m unity,
cords of large and sm all institutions?
2-. If an agency believes th a t an insti
including low- and m oderate-incom e
Urban, suburban, and rural in stitu
tu tio n ’s record in m eeting com m unity
neighborhoods • • • ”12345
tions? In stitu tion s th a t m ay law fully
credit needs is unsatisfactory, w hat
open branches and th ose th a t m ay
1. How should th e term s "entire
action, if any, may or should th e
not?
com m unity” and "low- and m oderateagency take w hen there is not a pend
5.
For
w
hat
period
of
tim
e
should
an
incom e neighborhoods” be defined?
ing application?
in
stitu
tion
’s
record
be
assessed?
2. Should th e geographic determ ina
3. W hat are th e specific policies or
6.
In
determ
ining
w
hether
th
e
credit
tion of com m unity vary for different
regulatory requirem ents, other than
needs
of
a
com
m
unity
are
being
m
et,
types of credit needs, such as m ort
th ose stated in response to th e previ
gage, agricultural, business, or con should th e credit extended by all fi
ous questions, which you believe the
nancial in stitu tion s in th a t com m unity
sum er credit needs?
agencies are required to follow or
3. Should identical com m unity m ea be com bined and com pared to th e
should follow in fu lfillin g their re
com m unity’s
total
credit
needs?
surem ent criteria be used for urban,
sponsibilities under th e Act?
Should a particular in stitu tion be con
suburban, and rural com m unities?
T his notice is published pursuant to
sidered to have a satisfactory record if
4. Should th e defin ition s take into
section
553(b) of T itle 5 U nited S tates
it
is
contributing
a
proportionate
account th e size, location, or branch
Code.
share of th e total credit extended in
structure of an Insitution?
th e com m unity?
5. Should th e geographic criteria for
T heodore E. A lliso n ,
7. Should an in stitu tio n ’s efforts in
th ese d efinitions be fram ed in term s of
Secretary of the Board.
m eeting specific types o f local credit
political boundaries, such as city
G ail W. P oh n ,
needs be w eighed equally in assessing
lim its, counties and m etropolitan
Associate Deputy Comptroller.
w hether it is helping to m eet th e
areas; or should th e criteria relate to
A lan R. M iller ,
credit needs of its entire com m unity?
econom ic bases such as trading areas,
Executive Secretary, Federal
8. In m aking assessm ents, how
areas from w hich deposits are ob
Deposit Insurance Corporation.
should th e agencies take into account
tained, or banking m arket areas?
specialization in m eeting certain types
B. Credit needs. Section 804 of th e
J. J. F in n ,
of credit needs (for exam ple, agricul
Act requires th e agencies to assess an
Secretary,
in stitu tio n ’s record of m eeting th e
tural loans, business loans, m ortgage
Federal Home Loan Bank Board.
"credit n eed s” of its com m unity.
loans, investm ents in m unicipal securi
J anuary 19, 1978.
1.
How should “credit needs” be de ties) by an institution being assessed
fined and measured? W hat is th e d if
or by oth er in stitu tion s in th e com m u
[ F R D oc. 78-2231 F ile d 1-24-78; 8:45 a m )
ference. if anv. betw een needs for
nity?
(A ) A c h a r t e r f o r a n a tio n a l b a n k o r F e d
e r a l sa v in g s a n d lo a n a sso c ia tio n ;
(B ) D e p o s it in s u r a n c e in c o n n e c tio n w ith
a n e w ly c h a r t e r e d S t a t e b a n k , s a v in g s b a n k ,
s a v in g s a n d lo a n a s s o c ia tio n , o r s im ila r in s ti
tu tio n ;
(C ) T h e e s ta b l i s h m e n t o f a d o m e s tic
b r a n c h o r o t h e r fa c ility w ith t h e a b ility to
a c c e p t d e p o s its o f a r e g u la te d f in a n c ia l in
s titu tio n ;
(D ) T h e r e lo c a tio n o f t h e h o m e o ffic e o r a
b r a n c h o ffic e o f a r e g u la te d f in a n c ia l i n s t i
tu tio n ;
(E ) T h e m e r g e r o r c o n s o lid a tio n w ith , o r
t h e a c q u is itio n o f t h e a s s e ts , o r t h e a s s u m p
tio n o f t h e lia b ilitie s o f a r e g u la te d f in a n c ia l
i n s t it u t io n r e q u ir in g a p p ro v a l u n d e r s e c tio n
18(e) o f t h e F e d e r a l D e p o s it I n s u r a n c e A c t
o r u n d e r r e g u la tio n s issu e d u n d e r t h e a u
t h o r i t y o f t itle IV o f 't h e N a tio n a l H o u s in g
A ct; o r
(F ) T h e a c q u is itio n o f s h a r e s In, o r t h e
a s s e ts of, a r e g u la te d fin a n c ia l I n s t i tu t i o n
r e q u ir in g a p p ro v a l u n d e r s e c tio n 3 o f t h e
B a n k H o ld in g C o m p a n y A c t o f 1956 o r se c
tio n 4 0 8(e) o f t h e N a tio n a l H o u s in g A ct.
S ec . 804. I n c o n n e c tio n w ith its e x a m in a
tio n o f a f in a n c ia l in s t it u t io n , t h e a p p r o p r i
a te F e d e r a l f in a n c ia l s u p e rv is o ry a g e n c y
s h a ll—
(1 ) A ssess t h e i n s i tu t i o n ’s r e c o r d o f m e e t
in g t h e c r e d it n e e d s o f its e n ti r e c o m m u n ity ,
in c lu d in g low- a n d m o d e ra te -in c o m e n e ig h
b o rh o o d s , c o n s is te n t w ith t h e s a fe a n d
s o u n d o p e r a tio n o f s u c h i n s t itu tio n ; a n d
(2 ) T a k e s u c h r e c o rd In to a c c o u n t in its
e v a lu a tio n o f a n a p p lic a tio n f o r a d e p o s it f a
c ility b y s u c h in s t it u t io n .
S ec . 805. E a c h a p p r o p r i a te F e d e r a l f i n a n
cia l s u p e rv is o ry a g e n c y s h a ll in c lu d e in its
a n n u a l r e p o r t to t h e C o n g re ss a s e c tio n o u t
lin in g t h e a c tio n s It h a s t a k e n to c a r r y o u t
its re s p o n s ib ilitie s u n d e r t h i s tit l e .
S e c . 806. R e g u la tio n s to c a r r y o u t t h e p u r
p o se s o f t h i s t it l e s h a ll b e p u b lis h e d b y e a c h
a p p r o p r i a te F e d e r a l f in a n c ia l s u p e rv is o ry
a g e n c y , a n d s h a l l ta k e e f f e c t n o l a t e r t h a n
390 d a y s a f t e r t h e d a te o f e n a c tm e n t o f t h is
t itle .
@FedFRASER