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Circular No. 9 6 4 7
March 1, 1984


To All State Member Banks, Bank Holding Companies,
and Others Concerned, in the Second Federal Reserve District:

The following statement was issued by the Board of Governors of the Federal Reserve System:
The Federal Reserve Board has announced a series of steps, based on recommendations from its Consumer Advisory
Council1 to strengthen enforcement of the Community Reinvestment Act.
In sending its report to the Council’s chairman, the Board said:
The Federal Reserve has completed its review of the Consumer Advisory Council’s study on the Federal
Reserve’s implementation of the Community Reinvestment Act and has taken actions to carry out most of the
Council’s 50 or so recommendations. A good many of the Council’s recommendations suggested improvements
that could be instituted by the Federal Reserve staff without official Board consideration, and others suggested
continuing existing Federal Reserve programs. In both cases the Board’s staff has taken appropriate action to
ensure the implementation of Council suggestions. The Board of Governors has noted these staff responses.
Several Council suggestions, however, required Board review and were considered at the Board’s January 25, 1984
Principal actions by the Board (other than those previously announced concerning procedures for processing bank
and bank holding company applications) are reported below.2
The Council suggested development by the Federal Reserve System of improved means for detecting lender practices
that illegally discourage loan applications.
The Board:
— In the interest of developing a unified system, invited other financial supervisory agencies to join in a review of
systems used in gathering information on the race, national origin, sex, marital status and age of applicants for
— Left open for future consideration proposed adoption of an automated or computerized system for analyzing data
derived from applications.
— Decided against the routine use of “ testers” 3 in examining for illegal credit discrimination by State member
banks. However, when there is a strong suspicion of possible discrimination at an institution, the Reserve Bank
will report the facts and consult with Board staff to determine if using testers is appropriate.
1. The Consumer Advisory Council, established by Congress at the request of the Federal Reserve Board, is composed of 30 members, representing a broad
range o f consumer and creditor interests. It meets several times yearly with the Board to counsel the Board on its responsibilities under the Consumer Credit
Protection Act.
The Board announced on January 31 a number of amendments to its procedures for bringing applications involving banks and bank holding companies to
public notice and for handling protests. These amendments incorporated most o f the Council’s recommendations in these fields that were included in the Coun­
cil’s review of the Board’s implementation of CRA. The previously announced Board and staff responses to the Council ’s recommendations with respect to these
application procedures are included in the overall responses made public by the Board, but are not repeated in this release.
2. The Board also considered, but decided not to pursue, Council recommendations regarding revision o f the CRA rating system and the CRA Statement. These
recommendations are set forth in its Report.
3. Testers might approach a lending institution by telephone, or in person, for the apparent purpose of applying for credit, but in fact to determine whether the
institution discriminates against some applicants, such as women or minorities.


The Council suggested that changes should be made to define clearly the responsibilities of Community Affairs
Officers (CAOs) at the Reserve Banks so as to ensure more consistent CRA implementation nationwide; that the Board
should make greater efforts to see to it that CAOs are carrying out their duties, and that the Board should devise a system
for measuring the effectiveness of CAO activities.
— The Board accepted the first two of these recommendations, but decided that the third is not compatible, at this
time, with the nature of the CAO’s role. However, future development of such a system was not ruled out.
— The Board is developing, in consultation with the Reserve Banks, a Systemwide statement of Community
Affairs Officer activities and responsibilities, and beginning in 1985 will require annual operations reviews of
this activity.
The Board staff responded affirmatively to a number of Council recommendations in the field of bank examination
procedures. These include giving special guidance to examiners in how to conduct examinations of both small rural insti­
tutions and large wholesale banks, sharing of information among examining agencies, broadening the range of organiza­
tions that examiners interview (with increased emphasis on contacts with community-based and minority groups), encour­
aging lenders to maintain written loan policies, and development of materials that examiners can use to discuss, with bank
management, bank participation in programs affecting small and minority businesses and local community development.
The staff also noted that the System’s affirmative action program meets recommendations of the Council regarding a
special recruitment effort for hiring Federal Reserve consumer compliance examiners; other System programs meet rec­
ommendations concerning recruitment, career training and development in the System. The Reserve Banks will continue
to emphasize consumer compliance examination as an integral part of their regulatory activity. The staff also responded
affirmatively to a number of other recommendations by the Council regarding consumer compliance examiners and exam­
Further, staff responses indicated agreement with Council recommendations concerning the activities,
responsibilities, training and relationship of CAOs to examiners in the area of community development, and for giving
priority to the community affairs functions of the CAOs. It was noted that the responsibilities of CAOs include the
development, as recommended by the Council, of community profiles and other credit-related data analyses to assist
examiners in evaluating the performance of banks under CRA.

A copy of the Board’s report, which was submitted to the Consumer Advisory Council on February 3, will be
furnished upon request directed to the Circulars Division of this Bank (Tel. No. 212-791-5216). Questions regarding
the report may be directed to our Office of Community Affairs (Tel. No. 212-791-5912).



M . S olom on,


B O A R D




W A S H I N G T O N , □ . C. 2 0 5 5 1

P A U L A. V Q L C K E R

February 3, 1984

Mr* Willard P Q Ogburn
Chai rman
Consumer Advisory Council
Eleven Beacon Street
Boston, Massachusetts 02108
Dear Will:
I am happy to report to the Council about Federal Reserve actions
that are being taken to enhance our community affairs and civil rights program,,
Many of these actions (a summary of which is enclosed) are in response to the
Consumer Advisory Council study on the Federal Reserve System's implementation
of the Community Reinvestment Act,,
When I asked the Council to undertake this review in the spring of
1982, I was confident that a comprehensive evaluation would be made. And,
indeed, the Council's study provided us with valuable first-hand observations
about the operation of our program and identified areas where improvement was
believed possible,, In covering all aspects of CRA implementation, the
Council's report shows a great deal of thought and effort, as well as an
appreciation for the difficult challenges we face in carrying out community
reinvestment objectives,, For these insights I am especially grateful „
I understand that the Council at its March meeting will receive an
oral briefing on the steps we have taken, which will provide an opportunity
for full discussion,,
Again, I want to convey my personal appreciation for a job well done.

[Ref. Cir. No. 9647]

February 3, 1984

The Federal Reserve has completed its review of the Consumer
Advisory Council's (CAC) study on the Federal Reserve's implementation, of
the Community Reinvestment Act (CRA) and has taken actions to carry out most
of the Council's 50 or so recommendations. A good many of the Council's
recommendations suggested improvements that could be instituted by the Federal
Reserve staff without official Board consideration, and others suggested
continuing existing Federal Reserve programs. In both cases the Board's
staff has taken appropriate action to ensure the implementation of Council
suggestions (Attachment A). The Board of Governors has noted these staff
Several Council suggestions, however, required formal Board review
and were considered at the Board's January 25, 1984, meeting. These included
issues relating to three recommendations made by the Consumer Advisory Council
in the area of procedures for CRA examinations, and to three recommendations for
enhancing the functions carried out by Community Affairs Officers (CAOs) at
each of the Reserve Banks. The Board also considered a number of recommenda­
tions made in the area of applications procedures in conjunction with a staff
review that was taking place during the CAC study. Many of the staff recom­
mendations coincided with those of the Council.
Each Council recommendation is listed, with the Board's action
summarized in bulleted paragraphs.
Bank Examination Procedures
1. The System should develop improved methods and data for detecting practices
designed to discourage loan applications fran minorities and other persons in
protected classes, giving specific consideration to methods such as, but not
limited to, automated data collection systems, written loan applications, and
use of testers.


The Board has invited other financial supervisory agencies to
join in a review of the systems used by each of the agencies
to gather information on the race/national origin, sex, marital
status and age of applicants for credit. These data are used
by the agencies to monitor compliance with the Fair Housing
Act and the Equal Credit Opportunity Act. The agencies have
evolved similar but differing systems and the Board determined
that the time may be appropriate to seek to devise a unified
data collection system which would reduce burden to creditors
while supplying useful information to the agencies' examiners.
The Board approved sending a letter to the other financial
supervisory agencies requesting their participation in a review
of the various systems (Attachment B).

= 2 -


The Board decided not to reject the adoption of an auto­
mated or computerized system to analyze applications data
but left the matter open to future consideration,,


The Board determined that it is not necessary at this time
to implement a general program of using "testers" as a
routine part of the System's examinations for credit
discrimination,, The Board believes, however, that using
testers in certain circumstances as part of the credit
discrimination examination is appropriate when an examination
indicates a strong suspicion of possible illegal discrimination„•
The Reserve Banks will report the facts of the situation to
the Board's staff for consultation as to whether those facts
warrant using testers to obtain information about the absence
or presence of illegal discrimination.

2. The present rating system, which has only two passing grades, should be
revised to permit examiners to distinguish adequately among: (a) banks with
a barely passable CRA record, (b) those doing a good job, and (c) those
doing an excellent job.

The present Interagency CRA Rating System is used by examiners
to assess a bank's performance in helping to meet the credit
needs of its community. The Board was informed that the rating
system is adequately performing the task for which it was
designed -- to summarize the findings of the examination and
to indicate to the supervisory agency whether supervisory
attention is needed. Based in part upon that information,
the Board decided that no change should be made in the rating

3. ' The CRA Statement should be revamped to make it a more useful instrument
of public disclosure. The Board should attempt to improve the Statement, even
though the task of achieving concurrence with other federal regulatory agencies
on prpposed changes might be time-consuming. The Board should also consider
other kinds of information that could be disclosed to the public in order to
improve public understanding of the CRA examination and supervisory activities
of the agencies.i/

After being advised that a recent attempt to raise a similar
CRA issue in a staff task force of the Federal Financial
Institutions Examination Council was unsuccessful, the Board
concluded that raising an issue again at this time would be
unproducti ve.

1/ The Board publishes the examination procedures used to assess a bank's perTormance under CRA. It is also involved with the other agencies in publishing
A Citizens Guide to CRA, which explains agency procedures for applications and
other matters relating to CRA. This publication is currently being updated.

- 3 -

Community Affairs
1. The Board should more clearly define the priority Reserve Banks should give
to CAO [Community Affairs Officer] activities to facilitate and ensure more
consistent CRA implementation nationwide.
° The Board accepted the recommendation and has reaffirmed
its support for the role of the CAOs at the Reserve Banks.
The Board reviewed a list of duties and responsibilities to
be carried out by the CAOs and asked that it be submitted
to the Presidents of the Reserve Banks for their comments.
Upon receipt and analysis of the comments, a final list of
responsibilities will be forwarded to the Reserve Banks by
the Board.
2. The Board should make greater efforts to see that the duties it has
set for CAOs are being carried out.

The Board determined that the CAO function will be subject
to the Board's Operation Review procedure beginning in 1985.

3. A system for measuring the CACTs impact on banks and citizens should be
developed to ensure the correction of difficiencies and the use of effective

The Board determined that such a system is not compatible
with the nature of the CAOs- role at the present time, but
did not rule out the development of such a system at a
1ater date.

Applications Procedures
Amendments to the procedures for processing applications incorporate
the following recommendations made by the CAC:
I. Adopt a revised newspaper notice of applications, published in "plain
English" and including a statement that one* of the factors the Board considers
in acting on applications is the performance of banks concerned in the application
in helping to meet local credit needs.


A model "plain English" newspaper notice of an application
will be used and the Community Affairs Officer of the Reserve
Banks will be designated as a source of further information.
Newspaper notices will include a statement that in acting on
applications one of the factors the Board considers is the
performance under CRA of banks involved in the application.

- 4 -

2. Explore ways in which Reserve Bank weekly bulletins noting applications
newly received can be made more informative,,

An expanded uniform format has been developed and will be
used for the weekly bulletin published by the Reserve Banks
detailing applications received during the preceding weeko
This notice will include reference to laws and regulations
governing the processing of applicationss identifying
Reserve Bank personnel (Community Affairs Officer) who
can provide further information, and list available
publications concerning CRA.

3o Publish a comprehensive document consolidating publications relating to
CRA and additional information on factors the Board considers in evaluating
applications under CRA.

The Board will work with the Federal Financial Institutions
Examination Council to update the Council's publication
A Citizen's Guide to CRA and will publish a summary
reflecting current Board positions on CRA factors.

4 0 Formalize procedures for notifying protestants of the Board's decision on
a protested application and take steps to explain the decision.

The Board will amend its Policy Statement to formalize
notification of protestants of decisions on protested

5. Make special efforts to provide protestants with an explanation of
an analysis of data relating to a protest.

Federal Reserve personnel will be prepared to furnish
protestants with an explanation of how data have been
analyzed in a variety of protests and provide a
sampling of relevant Orders and other material.

As part of the study, the Council's CRA Review Committee discussed,
but did not reach consensus on, whether the Federal Reserve's standards for
holding public hearings or meetings are adequate. Partially as an outgrowth
of this discussion, the Board has adopted a revised policy statement for
applications processing -- enhancing the use of private meetings and stream­
lining the procedures for public meetings in protested applications.
In addition, although some members of the Council's CRA Review
Committee had verbally expressed support for the use of a "postmarked" standard
by the Board to determine the official date of receipt of comments on an
application, the Board believes upon consideration that a "received" basis is
the better standard to use. However, the Board has also made it clear that
extensions of the comment period from the Secretary's Office are available
when there is just cause. Requests for extensions may be made in writing or
by telephone to the Secretary's Office prior to the expiration of the comment

Attachment A
Development of Compliance Personnel
lo Federal Reserve Banks should recruit specifically for the position of
consumer compliance ex ami ners , and should place greater emphasis on recruiting
from colleges and universities within the Federal Reserve Districts in which
they are located and from minority institutions in any location, with special
attention to recruiting women and minorities.
° The Systen has implemented an affirmative action program covering
Board and Reserve Bank personnel, including examiners,. This policy
requires consideration of the appropriate regions and schools from
which to recruit personnel to assure that minority candidates are
given the opportunity to realistically compete for available po­
2. The verbal and analytical skills needed by a good consumer compliance
examiner should be identified, and personnel with these skills should be

o As noted by the report, in 1982 the System developed and
implemented a set of educational guidelines for the full
performance compliance examiner. That policy emphasizes
these qualities.
3. The practice of recruiting more experienced persons, in addition to entry
level trainees, should be continued, and the flexibility of offering competitive
salaries to attract more experienced personnel maintained.
° The relevant experience of applicants for compliance examiners
positions is one factor in deciding which among several can­
didates to hire. Reserve Bank managers have frequently ex­
pressed interest in attracting experienced personnel but have
often had trouble locating such people who are available to
accept the position. The interest in attracting experienced
people remains high and there have been several notable suc­
cesses in the last two years.
4. Consular compliance examination departments must continue to develop a
distinct compliance examiner career path.
° The specialized career path of the compliance examiner has been
an important feature of the program since its inception. There
are no plans to change that policy.
5. Reserve Banks should continue the effort to build the image of the compliance
examination as an integral part of bank regulatory activity.

° Having a separate compliance examination program has helped
Reserve Banks to highlight the importance of the work of these
examiners, particularly through the System's educational/
advisory service which has been praised by many bankers as
a highly professional and useful service.


6. Premium pay programs, which reward examiners for accumulated travel nights,
should be continued and extended to include more examiners. Rotation schedules
that give examiners respite from travel with stretches of time in the Reserve
Bank should be continued. •
o Premium pay programs have been initiated by Reserve Banks in
response to identified needs in the Bank Examination departments.
During operations reviews of the Bank Examination function at the
Reserve Banks, the review teams (including members of DCCA's Com­
pliance Section) examine the possible need for such programs based
upon their analysis of the particular situation. Staff will con­
tinue to recommend those programs which address specific needs.
° Recent reviews have also found many of the Reserve Banks
experimenting with and implementing programs for rotating
examiners into the Reserve Bank for extended periods. Staff
expects this trend to continue consistent, of course, with
the needs of the Reserve Banks to complete their examinations.
Further, the Board's staff is presently reviewing the possibility
of developing a program to enable more of the examination steps
to be done in the Reserve Bank. If this proves to be possible it
should result in less travel for examiners.
7. Reserve Banks' Community Affairs Officers (CAOs) should participate in the
training of examiners. In Reserve Banks in which the CAO is located in a different
department from the examination staff, special efforts are needed to make certain
that such participation exists.
o Staff agrees that the CAOs should participate in the training
of examiners as they do in eight Reserve Banks where the CAO is in
charge of the compliance function. Staff has taken steps to encourage
this activity at the other four Reserve Banks.
8. Trainees should study regulations in the context of their application to
examination workpapers and by observing their use in bank examinations.
o The 1982 policy on examiner education addresses this recom­
mendation as it offers a full menu of educational activities
new examiners can anticipate as part of their training. This
includes formal training programs as well as hands-on work
training in the banks using the workpapers and other prescribed
examination tools. Of necessity, however, all of the steps in
the training program cannot be accomplished at once, but must
be done in a logical order that both challenges and assists the
They [new examiners] should receive more guidance during in-house training
than they are presently given. As an initial experience, reading regulations
alone in a room is not enough.

o Staff agrees and would reemphasize that the System policy offers
a full course of training over time. Some reading of the regulations,
however, is unavoidable. However, the in-house training programs of
many of the Reserve Banks have become more systematized in recent
years and the Board has developed video-taped lectures that can
be used in the Reserve Banks by examiners to explain some of the
material in the regulations.

-3 =

10o They [new examiners] should be included in all aspects of the examination
process including wrap-up discussions* meetings with the Community Affairs Officer
on community contacts* and in community outreach activities0
o Staff's reviews of the Reserve Banks indicate that steps in
these directions have been made and that Reserve Bank's management
is aware of the need for well rounded experience,, Consequently,
more Reserve Banks are" attempt!ng to give examiners various
experiences consistent* of course* with the examiner's own
abilities and the need to complete the examination,, In smaller
banks such involvement is often unavoidable since* typically*
there are few examiners in the bank and all aspects.of the
examination must be accomplishedo
.11. For variety in assignments and the chance for learning opportunities*
trainees should accompany senior examiners on work assignments whenever possible0
° Staff believes it is every Reserve Bank's policy to require new
examiners to undergo a period of tutelage with close supervision
by more experienced examiners„ This system forms the basis not
only for giving well rounded experience* but also for control of
the examination and determining when an examiner is ready for more
responsibilityQ In recent years these systems* in several Reserve
Banks* have become much more formalized0
12. When examiners on rotational assignment are in the [Reserve] Bank* they
should serve as teacher-consultants to new traineeSo
o Staff believes this is becoming a much more prevalent practice
at the Reserve Banks0 For example* some Reserve Banks are giving
younger examiners more responsibi1ity for preparing portions of
the reportSo Of course* these efforts must take into account
the overriding objective of completing examination analyses and
reports on time and in a high quality fashion0
13o When possible [Board] training should be scheduled for a time when trainees
have had some exposure to actual bank examinations but before they are so familiar
with compliance regulations and examinations that the instruction is simply a
o The System compliance examiner education policy attempts to
meet this goal by targetting its curriculum toward the examiner
with about 3-6 months' experience,, By holding two basic examiners'
schools in 1983 (with 2 planned in 1.984)* staff believes its goal
and the Council's recommendation was largely meto
140 Trainees who have had little or no field experience should receive
supplemental support,,

° Staff believes there is growing awareness of this need among
Reserve Bank managers and concrete actions have been taken to
offer this support,,


15o The selection of trainers should be based in part on their demonstrated
teaching skills,,
° Instructors are chosen based on their experience level as well as
their ability to teacho Any staff member from DCCA or the Reserve
Banks who does not have demonstrated teaching experience is sent to
the FFIEC's Instructor Training School prior to instructing at Board
school So
16. These instructors should receive notice of topic assignments early enough
to prepare adequately.
o The teaching assignment system used in the basic schools and soon
to be introduced in the advanced school, help insure that instructors
are able to improve their performance on assigned portions of the
curriculum by repeating their*assignment from one school to the next.
New instructors are generally offered the opportunity to observe
one session before being given a full teaching loado Board staff
endeavors to distribute new materials as early as possible to give
instructors sufficient time to prepare.
17. The mock bank examination should be restructured to be more coherent and
more smoothly paced; it should also not be confusing and contain a more realistic
number of violations.
o The mock examination is reevaluated after each school to
ensure that it reflects conditions likely to be encountered
during examinations and to otherwise make it more useful.
Changes have been made that address the Council's concerns.
18. The amount of material covered in the school should be reduced or the
length of training increased.
o Another level of Board training was begun in 1983 for compliance
examiners with 18 to 24 months of experience. The Board training
course for beginning examiners will be adjusted once more due to
the deregulation of deposit interest rates and the simplification
of Regulation Q. The additional time gained from moving some
instruction to the advanced school and from restructuring the1
Regulation Q lesson plan will allow more time for increased
training in the CRA and civil rights area.

The Resident Examiner program should be continued.
o Current plans are to continue the program as it has proven to
be well received and useful.


Bank Examination Procedures
lo The Board should modify its materials to give greater guidance to examiners doing
CRA exams of small rural institutions and, at the other extreme, of wholesale banks0
° Staff has begun to enhance our material on special situations involving rural areas and wholesale operations and will continue to
try to improve our programs of instruction at Board consumer com­
pliance schoolso
2. The Board should encourage examining agencies to share information (e.g.,
lists of useful community contacts and data concerning community needs), parti­
cularly for rural areas0
° The Board has initiated this type of encouragement to the FFIEC
in the past. A considerable amount of such interagency cooperation
is taking place in some regions of the country. Staff will, however,
address it once more for FFIEC consideration and action.
3. The Board should ensure that examiners interview a broader range of organiza­
tions, with increased enphasis on contacts with community-based groups and
minority organizations.
° Staff will re-emphasize to examiners that they should strive to
increase existing contacts with community-based organizations and
civil rights groups.
4. Reserve Banks should develop more systematic procedures for maintaining
information that is obtained in interviews.
° Staff will work with the Reserve Banks to examine the need for
a systemwide procedure and, if one is needed, it will be developed.
A monthly report to the Board on outside contacts that has already
been instituted should provide a ready vehicle for doing so.
5. Lenders should be required to maintain written loan policies for all
types of credit they offer.
° Examiners frequently encourage State member banks to adopt and
maintain written loan policies as an effective tool for internal
bank control. To assist in encouraging institutions in this matter
staff will consider developing a compliance aid for examiners to
provide to bank management in appropriate circumstances.
6. Since the CRA examination requires more subjective ratings than other exam­
inations special attention should be given to on-the-job training. Examiners
not only need to be competent, but also should have sufficient self-confidence
to make the judgments required for meaningful ratings.

o Staff concurs. Staff will work with Reserve Bank staff to pro­
vide more training assistance to examiners regarding CRA ratings.



Such training is already supplied in the basic compliance
examiners school. In addition the advanced compliance
school has been instituted since the CAC review was begun
and CRA subjects* including the rating system* are taught
at some length,, One very successfully implemented new
aspect of the school is a CRA case study designed by personnel
from one of the Reserve Banks that draws upon an actual
case history,,
7 0 The Federal Reserve should publicize its willingness to deal with individual
[CRA] complaints,,
. o Staff is coordinating the preparation of an updated version
of A Citizen's Guide to CRA which will contain an explicit
statement that the System is willing to deal with individual
complaints related to CRA„
8. The Board should develop more descriptive materials and specialized training
for examiners on federal, state and local credit-related programs especially those
assisting small and minority businesses and on local community development programs
in which banks may participate,,


o Staff has begun to enhance its training activities for
examiners on various credit-related programs and is under­
taking further efforts in this area by creating special
advanced seminars, (some of which will be directed toward
credit-related programs) for senior examiners,, The Board
has established a periodic newsletter, "Communi-que", for
community affairs personnel within the System devoted in
great part to explanations of existing programs and how
banks can involve themselves in these programs„ Staff
has provided a number of specialized publications to the
Community Affairs Officers at the Reserve Banks during the
past eighteen months which have assisted the CAOs in providing
timely information to member banks about some credit-related
programs. Staff will seek to continue to provide timely
and pertinent material to the CAOs and will encourage all
the CAOs to develop material from their own districts in
addition to providing training sessions for examiners at
the Reserve Banks,,

Community Affairs
1 . The CAC recommends that Reserve Bank CAOs participate in examiner training,
in preparing materials for examiners on community devel opment programs, and
in acting as a source for community outside contacts., These recommendations
highlight that in cases in which the CAO is not located in the Consumer
Affairs section, the Board be sure this relationship between the examiners
and the CAO be maintainedc
o The Board has stressed this relationship in its CAO visitation
program and will do so in its Operations Review of the functione
2. The CAC recommends that the Board provide specialized training for examiners
in the area of community development.
o The Board's Community Affairs Coordinator instructs examiners
in the Advanced Consumer School on this subject. In conferences scheduled
to be held for Senior Examiners, community development programs will be part
of the training program. The Community Affairs Coordinator also instructs
examiners at the Reserve Banks upon request.
3. The CAC recommends that the Board communicate the priority it gives to the
community affairs function to banks and the general piblic.
° The new format for the Mini H2 and the newspaper notice will now
include the Community Affairs Officer as the principal contact on CRA matters.
Each Reserve Bank has been provided c'amara-reacty copy for the publication of
a pamphlet for public distribution on the Community Affairs Officer. The Board's
letter to the Presidents and the list of CAO duties will be distributed to
national community publications, and the Board's CAO and Community Affairs
Coordinator will publicize the priority at the variety of meetings they
attend and talks they give throughout the country. Also the new edition of
the FFIEC's Citizens Guide to CRA will emphasize the role of the CAO.
4. The CAC also recommends that "the Board encourage Reserve Banks to develop
community profiles and other credit=related data analysis to assist examiners
in evaluating bank performance" under CRA.
° The list of responsibilities for CAOs points out that the development of community profiles is one way CAOs can become aware of community- *
needs. The Board has developed and distributed to CAOs and Consumer Affairs
managers a guide for the development of community profiles. This guide
emphasizes that an essential element of any profile is information obtained
from the community itself.

Attachment B



or THE

W A S H I N G T O N , 0. C. 2 0 5 5 1




C h a i r m a n

January 27, 1984

Mro William Isaac
Chai rman
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D 0Co 20429
Dear Bill:
The Federal Reserve's Consumer Advisory Council conducted a study
of our Community Reinvestment Act activities and presented its report on
August 19, 1983. A copy of the study was sent to your agency by Governor
Nancy Teeters on August 23, 19830
One of the Council's recommendations was that the Board, as an
enhancement to its credit discrimination examination procedures, consider
requiring the use of written loan applications to collect data on the 6
personal characteristics (such as race, sex, marital status, and age)
of loan applicants. We understand that the Federal Home Loan Bank Board,
the Federal Deposit Insurance Corporation and the Comptroller of the
Currency have special programs requiring covered institutions to collect
these data, whereas our examination program and that of the National Credit
Union Administration rely on the availability of data supplied voluntarily
by loan applicants as called for by Regulation B, Equal Credit Opportunity.
We also understand that some of the agencies' systems are presently being
reviewed by the Office of Management and Budget as part of its function
of reviewing government programs to try to reduce paperwork and reporting
burden on the public.
The Board is presently reviewing Regulation B with the purpose
of simplifying its provisions where possible. One concern that has been
voiced in the comments received on the proposed revisions is that the
existence of the agencies' differing data collection systems causes con­
fusion, especially for holding companies with institutions supervised by
two or three supervisory agencies.

Mr. W illiam Isaac


The Board believes the time is right for the supervisory agencies
to review the various data collection systems with the purpose of considering
a single system suitable for all creditors. The Board is interested in
exploring the idea of developing a uniform loan application data collection
system that would supply information for examiners' use. We believe that
any burden caused by changing the systems is likely to be minimal while the
benefits of a unified system are likely to be welcomed by most creditors.
I invite you to join us in this review. Members of our staff will
contact members of your staff to explore the feasibility of this project.


(signed) Paul Aa Volcker