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S. HRG . 100-905
PROVISIONS AIMED AT STRENGTHENING THE
HEARINGS
BEFORE THE
COMMITTEE ON
BANKING, HOUSING , AND URBAN AFFAIRS
ONE HUNDREDTH CONGRESS
SECOND SESSION
ON
COMMUNITY REINVESTMENT, CHECK CASHING , LIFELINE BANKING
SEPTEMBER 8 AND 9, 1988
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
U.S. GOVERNMENT PRINTING OFFICE
90-163
WASHINGTON : 1988
For sale by the Superintendent of Documents, Congressional Sales Office
→
了
1
COMMITTEE ON BANKING , HOUSING, AND URBAN AFFAIRS
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CONTENTS
CO
00
voor
THURSDAY, SEPTEMBER 8, 1988
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Opening statement of Chairman Proxmire ........
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Robert L. Clarke, Comptroller, Comptroller of the Currency, Washington, DC ..
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John M.Kolesar, president and CEO , AmeriTrust Development Bank, Cleve
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FRIDAY, SEPTEMBER 9, 1988
Opening statement of Chairman Proxmire.........
Opening statements of:
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WITNESSES
Jonathan Brown, BankWatch, Washington , DC ........
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ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD
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“ New Initiatives in Banking Regulation : 1988 ,” by Robert L. Clarke, Comp
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PROVISIONS AIMED AT STRENGTHENING THE
THURSDAY, SEPTEMBER 8, 1988
U.S. SENATE,
COMMITTEE ON BANKING , HOUSING , AND URBAN AFFAIRS,
OPENING STATEMENT OF CHAIRMAN PROXMIRE
The CHAIRMAN. The committee will come to order.
( 1)
2
1977 worried that mybill would lead to Government- imposed credit
allocation . I assured them then - and I quote what I said :
1
1
3
STATEMENT OF THE HONORABLE JOHN HEINZ
BEFORE THE COMMITTEE ON BANKING , HOUSING AND URBAN AFFAIRS
MR . CHAIRMAN ,
I JOIN YOU IN WELCOMING OUR DISTINGUISHED WITNESSES
AS THIS COMMITTEE EXAMINES AMENDMENTS TO THE COMMUNITY
REINVESTMENT ACT AND OTHER CONSUMER-RELATED PROVISIONS PROPOSED
RECENTLY BY THE HOUSE BANKING COMMITTEE IN H.R.
5094 .
LAST MARCH , THIS COMMITTEE INVITED COMMUNITY GROUPS TO EVALUATE
THE PERFORMANCE OF THE FEDERAL BANKING AGENCIES ' ENFORCEMENT OF
THE COMMUNITY REINVESTMENT ACT ( THE " CRA " ) . THESE GROUPS WERE
TOUGH GRADERS .
EACH OF THE BANK REGULATORS WERE GIVEN FAILING
GRADES .
THE COMMUNITY GROUPS ALSO COMPLAINED THAT THE BANK REGULATORS
WERE EASY GRADERS WHEN IT CAME TO TESTING THE BANKING INDUSTRY'S
COMPLIANCE WITH THE CRA .
THESE GROUPS NOTED THAT 98 %
OF ALL
BANKS RECEIVE PASSING GRADES WHEN , IN FACT , THE PERFORMANCE OF
.
MANY BANKS SIMPLY DID NOT MEASURE
SCHOOL
IS NOW BACK
IN SESSION .
UP .
THE SCHOOL SUPERVISORS ON THE
HOUSE BANKING COMMITTEE HAVE PROPOSED A BRAND NEW CURRICULUM ,
WITH LOTS OF REMEDIAL COURSES , A TOUGHER GRADING SYSTEM AND
MANDATORY EXAMINATIONS EVERY TWO YEARS .
MOST IMPORTANTLY , UNDER
THESE NEW RULES , THE BANKS WILL NOT BE PERMITTED TO ENGAGE IN
EXTRA - CURRICULAR ACTIVITIES , SUCH AS STARTING A SECURITIES
BUSINESS , UNLESS THEY GET BETTER THAN AVERAGE GRADES ON THEIR CRA
EXAMS .
1
4
THE BANKING INDUSTRY SAYS THAT THE NEW CURRICULUM IS TOO TOUGH .
THEY DON'T MIND HAVING TO PASS A CRA EXAM , BUT FEEL THAT THE
GRADING CURVE IS TOO HIGH .
BE AT THE HEAD OF THE CLASS .
THEY SAY THAT NOT EVERY STUDENT CAN
IF THEY WORK HARD AND PASS THE CRA
EXAM , THEY WANT TO BE ABLE TO ENJOY THE OTHER ACTIVITIES
AVAILABLE UNDER GLASS - STEAGALL REFORM .
THE BANKS ALSO WANT TO DO AWAY WITH THE " POP - QUIZ "
SYSTEM .
THEY
SAY THAT IF THEY PASS THE CRA EXAM , THAT IT IS UNFAIR TO BE RE
GRADED EVERY TIME THEY APPLY TO ENGAGE IN AN EXTRA - CURRICULAR
ACTIVITY .
GOOD GRADES , IN THEIR VIEW I, SHOULD BE REWARDED WITH
THE FREEDOM TO DO OTHER THINGS WITHOUT CHALLENGE , UNTIL THE NEXT
EXAM .
MR . CHAIRMAN , THE GOALS OF THE CRA , ENACTED
REMAIN IMPORTANT TODAY .
TEN YEARS AGO ,
NO DOUBT , THE CURRICULUM SHOULD BE RE
EXAMINED AND , IF WARRANTED , UPDATED TO REFLECT CHANGES OVER THE
PAST THE DECADE .
HOWEVER , AS WE EXAMINE THE HOUSE PROPOSAL , WE SHOULD BEAR IN MIND
THAT CRA IS NOT THE ONLY COURSE IN OUR SCHOOL SYSTEM .
WE WANT
OUR FINANCIAL INSTITUTIONS TO BE WELL - ROUNDED , RESPONSIBLE , AND
OF COURSE , HEALTHY AND PRODUCTIVE MEMBERS OF THE FINANCIAL
SERVICE COMMUNITY .
THE NEW EXTRA - CURRICULAR ACTIVITIES AVAILABLE
TO BANKS ARE IMPORTANT TO THEIR DEVELOPMENT .
THESE ACTIVITIES
SHOULD NOT BE PUT OUT OF THE REACH OF THOSE BANKS THAT ADEQUATELY
MEET THEIR CRA RESPONSIBILITIES .
5
OPENING STATEMENT OF SENATOR GARN
Senator GARN. Mr. Chairman, as you mentioned, today the com
mittee starts 2 days of hearings on the consumer provisions of the
banking bill passed by the House Banking Committee.
6
They should only be passed as a part of a larger package in which
all important banking issues are addressed.
OPENING STATEMENT OF SENATOR BOND
Senator BOND. Thank you , Mr. Chairman .
OPENING STATEMENT OF SENATOR WIRTH
Senator WIRTH . Thank you, Mr. Chairman .
7
I want to thank you for having this hearing. I think it begins in
a positive way to set us up for the potential of a constructive con
ference with the Senate and the passage of the legislation that I
think all of us want to see happen.
On
a
>
OPENING STATEMENT OF SENATOR SASSER
Senator SASSER . Thank you , Mr. Chairman .
8
Well, I am not persuaded that new powers in and of themselves
does mean more profits for banks. In fact, it can in the long run
mean more risk, and greater losses, as we saw with the legislation
dealing with the thrift industry.
9
This committee has approved good laws: the Equal Credit Oppor
tunity Act, the Community Reinvestment Act, and the Home Mort
gage Disclosure Act, which supplement our civil rights laws. It is
time we enforced them and made any necessary improvements.
STATEMENT OF ROBERT L. CLARKE, COMPTROLLER ,
BANKS PERFORMANCE IS THE RESPONSIBILITY OF MANAGEMENT
Our approach - for both safety and soundness and compliance su
pervision - is built around the principle that a bank's performance
is — first and foremost — the responsibility of its management. We
can best supervise national banks by insisting that their manage
ments put in place effective compliance policies, that they establish
accountability, and that they develop systems and controls to moni
tor performance. We insist that national bank management take
those actions, and we insist that the policies are followed and that
the systems and controls in fact work.
/
12
approach
an
undertook
OCC
the
ago
months
Sixteen
compliance
to
ew
.supervision
objectives
complementary
two
first
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with
approach
n
supervision
.time
more
compliance
on
spend
to
was
objective
second
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between
balance
right
the
strike
to
was
safety
and
supervision
compliance
.and
mission
,our
supervision
soundness
principal
supervision
,w
objectives
two
these
meet
To
ac
developed
ompliance
e
with
and
law
compliance
which
focuses
the
on
by
process
program
achieved
.T
be
is
regulation
encourages
adopt
to
banks
process
his
activities
compliance
in
conducted
are
their
all
that
ensure
to
systems
the
that
both
have
officers
bank
clearly
establishes
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.
law
with
abank's
.responsibility
efforts
compliance
for
accountability
the
and
And
their
is
it
that
management
bank
senior
to
emphasizes
day
every
-working
are
systems
bank
that
ensure
to
responsibility
Remarks
by
Conference
the
:before
Initiatives
"New
Regulation
Banking
:in
"
1988
Washington
,D.C.
.
bank
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as
taking
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of
ocusing
to
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and
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promote
both
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actions
complementary
banks
.
national
of
performance
the
different
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way
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ritics
anything
approach
you
Whenever
n
a
in
and
ew
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past
of
experience
the
by
efforts
your
judge
to
doing
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so
:
included
have
actions
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efforts
your
of
point
the
miss
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ar
nd
esult
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what
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or
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mere
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do
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10
a,Nyears
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made
Gould
Jack
today
critic
Times
York
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ago
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Presley
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of
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renders
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ut
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improve
to
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results
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achieve
don't
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deter
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can
bore
."is
unutterable
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action
appropriate
corrective
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questions
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two
you
ask
me
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technique
of
terms
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ad
is
program
compliance
revised
from
eparture
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of
most
know
t
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.s
past
in
things
did
we
way
scheduled
almost
regularly
on
exclusively
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history
relied
OCC
he
soundness
and
safety
promote
responsibility
our
meet
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examinations
the
.bank
law
monitor
with
compliance
the
In
and
promote
to
AND
examinations
to
regularly
scheduled
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area
wcompliance
these
used
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we
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a
found
when
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ofnd
,identify
areas
any
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Elvis
have
heard
ever
you
of
many
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Gould
Jack
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ever
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art
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no
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of
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resley
Proust
appreciated
that
audience
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nd
icasso
appreciate
would
that
audience
an
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interested
was
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.
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management
bank
to
remedies
appropriate
recommend
rock
blues
rhythm
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roll
.and
Presley
nd
this
call
might
One
s
the
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compliance
to
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pproach
find
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.
them
fix
to
bankers
force
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faults
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different
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rules
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he
process
the
in
by
played
wnd
be
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music
popular
American
,a
goal
his
was
he
one
hich
trhat
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compliance
to
approach
of
part
other
any
problems
with
dealt
directly
major
:ione
drawback
,htad
supervision
successfully
.
met
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fact
the
only
al
is
There
new
Presley's
of
review
Gould's
Jack
in
critic
any
for
esson
be
should
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in
judges
who
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that
me
to
seems
It
approach
.
least
,aat
reassess
.to
leisure
,ifthen
prepared
t
repent
not
/
14
/3
are
company
lead
holding
the
bank
activities
:and
compliance
Daily
legal
housed
bank's
the
in
Section
,w
is
hich
C
administered
aompliance
by
,.Inime
addition
full
officers
-t
staffed
four
by
is
and
division
location
or
area
each
designated
for
officers
been
have
compliance
responsible
officers
are
T
compliance
. he
company
holding
the
throughout
bankers
fix
to
force
and
faults
approach
find
still
will
revised
our
while
ats
them
Is
,i
before
compliance
promoting
in
purpose
principal
tressed
s
faults
first
the
in
systems
avoid
to
bankers
create
encourage
is
Iplace
,i
words
other
through
compliance
promoting
to
addition
.n
OCC's
approach
imposing
,t
found
is
noncompliance
where
remedies
he
just
other
the
like
amanagerial
function
as
compliance
elevates
b
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ank
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functions
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taking
by
And
s
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our
that
believe
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e
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and
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raining
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laws
for
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c
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ahas
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company
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this
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it
nd
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guide
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as
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serve
to
Manual
has
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procedural
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manuals
The
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departmental
with
.company's
locations
company
The
and
departments
all
to
distributed
been
w
being
also
are
hich
compliance
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reviews
Department
Audit
l
og
Compliance
maintains
.T
Officer
Review
acompany
the
by
conducted
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company
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areas
and
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trends
problem
identify
violations
ofnd
to
1,400
than
ore
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1987
Over
.of
training
c
compliance
am
developed
under
sessions
training
attended
various
holding
company
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importance
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he
significant
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of
nd
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compliance
awareness
maintain
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c
acompany
ompliance
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importantly
ahMost
to
lead
will
it
believe
compliance
of
level
the
industry
.in
past
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the
in
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it
what
from
now
different
is
approach
our
Because
m
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istake
experience
U
,o
the
of
would
ajudge
ne
nfortunately
past
by
it
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misconceptions
that
is
program
compliance
our
concerning
observed
scarce
of
problem
our
solution
at
is
it
believe
people
some
to
emporary
is
misconception
.Another
banks
problem
of
numbers
large
and
resources
responsibility
compliance
to
hat
our
tipping
only
are
we
that
in
--
.
employees
and
officers
its
among
major
management
this
of
than
the
and
-words
louder
speak
Actions
to
committed
is
it
that
concerned
all
telling
company
banking
direction
to
necessary
leadership
and
eager
the
provide
compliance
Nick
case
the
either
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words
other
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romise
supervision
ar
is
ecognition
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compliance
to
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to
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increasingly
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supervision
bank
traditional
that
.
responsibilities
supervisory
our
fulfilling
of
means
best
the
provide
asuccess
effort
compliance
its
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it
and
here
is
stay
.to
change
to
is
supervisors
as
mission
our
that
said
been
often
has
It
behavior
change
that
show
to
is
,and
changing
in
step
first
the
program
compliance
revised
the
with
experience
personal
My
.
reasonable
is
.
goal
achieve
to
beginning
already
is
it
that
indicates
11
of
level
that
evidence
to
were
banks
all
national
at
management
senior
If
,and
direction
leadership
provide
to
of
willingness
,that
commitment
national
by
compliance
of
level
overall
the
enhance
would
efforts
their
ensure
to
remedies
he
act
t
-fafter
imposing
our
than
more
far
banks
eadership
and
l
,could
commitment
Fostering
.ever
do
to
hope
compliance
he
,t
ultimate
herefore
is
management
senior
of
part
the
on
direction
After
,Ic
approach
revised
the
development
and
testing
of
months
16
an
methodology
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new
about
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two
our
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t
:idraw
objective
our
of
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this
that
aware
are
time
however
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e
same
the
At
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our
components
five
Sof
the
one
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ideal
and
-toerm
long
.
deter
noncompliance
continues
be
to
approach
the
supervisory
our
of
target
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country
around
ankers
lof
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them
to
sense
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makes
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revised
our
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me
tell
--
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e
compliance
supervision
approach
to
uour
revised
,do
know
you
As
,it
hoped
had
we
As
the
of
bankers
among
awareness
increasing
is
every
examine
not
year
.bank
.they
it
on
place
we
importance
the
and
compliance
for
have
responsibility
?with
law
the
are
complying
visit
not
do
we
banks
that
ensure
How
:
promote
to
intended
we
efforts
making
by
responding
are
bankers
And
accountability
internal
delineate
clearly
that
systems
compliance
creating
in
help
our
that
and
most
comply
to
want
banks
assume
we
First
developing
assisting
in
them
and
-are
expectations
our
what
telling
of
level
overall
higher
result
an
in
-will
techniques
compliance
compliance
.activities
law
with
b
in
aank's
operating
for
midwestern
holding
bank
management
am
of
ajor
,the
example
For
senior
compliance
comprehensive
c
-w
orporation
ide
implemented
year
acompany
last
their
violations
prompts
and
which
identifies
-system
management
our
revised
embodies
of
objectives
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asystem
-correction
that
c
policy
statement
that
aapproach
developed
management
The
. orporate
responsibilities
,a
ond
system
compliance
bank's
the
describes
utlines
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Directors
of
senior
Board
the
and
management
support
represents
the
aChich
includes
program
bank's
The
,w
Committee
ompliance
efforts
enforcement
of
r
,. egardless
compliance
incorporates
deterrence
that
of
strategy
on
ac
lassic
rely
,we
But
also
subject
law
to
or
that
firms
are
i
, three
First
. ndividuals
elements
they
will
beeasonable
ris
chance
there
abelieve
must
regulation
.
compliance
for
monitored
Exchange
.This
operates
Commission
and
Securities
the
how
is
/15
167
examination
found
Our
bank's
the
that
taken
had
management
to
steps
no
afwritten
.create
institution
the
at
system
compliance
ormal
no
had
It
Revenue
Internal
the
how
is
.This
operates
Service
consumer
onome
decisions
credit
for
standards
,h
installment
improvement
had
The
training
.bank
applications
loan
purchase
home
or
formal
no
A.for
taking
in
interest
no
evidenced
management
compliance
nd
program
acompliance
creating
by
performance
compliance
its
improve
to
steps
any
,system
so
doing
for
need
the
understand
not
could
simply
management
The
.
alarge
found
examination
our
when
even
number
and
law
consumer
of
Highway
the
how
is
operates
Patrol
.This
.,it
works
Generally
uhere
so
Even
,t
approach
revised
our
r
a
than
more
is
nder
easonable
r
a-is
there
-easonable
expectation
national
individual
an
that
chance
for
examined
be
will
.bank
compliance
violations
:
regulation
substantive
found
examination
The
Equal
of
violations
Opportunity
Credit
regulations
inending
Truth
and
-L
aAct
evidenced
that
and
regional
all
of
half
one
in
examinations
conduct
we
year
Each
affiliates
their
and
appropriate
as
multinational
holding
companies
well
as
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institution
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16
his
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banks
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illion
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urthermore
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housing
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/
17
Manual
around
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finally
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OCC
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e
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information
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our
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sheet
data
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comes
ompliance
1989
.
of
beginning
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.
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complete
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several
of
quarters
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conducted
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e
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three
last
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collected
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information
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of
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banks
national
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point
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though
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is
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ven
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conclusions
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one
this
with
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ould
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banks
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cases
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Secrecy
Bank
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offers
approach
this
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me
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percent
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about
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own
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revealed
were
they
when
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violations
or
laws
trust
of
time
the
percent
93
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.
time
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banks
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Bank
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preliminary
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for
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room
is
here
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to
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now
banks
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performance
systems
the
of
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improvement
.
have
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go
we
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improve
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banks
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we
expect
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and
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e
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esting
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quarter
latest
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prepare
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e
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sheets
.
year
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have
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that
information
pool
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of
further
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refine
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analysis
This
,w
turn
to
us
13
.
there
got
we
before
14
Mr. CLARKE. Mr. Chairman, I am here this morning to discuss
title IV of H.R. 5094, which is part of the banking reform legisla
tion that the House Banking Committee approved in July.
CONCERNS ABOUT ENACTMENT OF TITLE IV
The OCC has five serious concerns about title IV of that bill. Our
concerns lead us to the conclusion that it would be unwise and un
warranted to enact title IV. What are our five concerns? The legis
lation's consequences; its inflexibility; its costs; its effects on super
vision ; and its effects on Glass -Steagall Act reform . Now, let's look
at each of those concerns in turn .
ary role .
INFLEXIBILITY
The OCC's second concern with title IV is that it would prescribe
in unprecedented and unwarranted - detail how the Federal bank
regulatory agencies must enforce consumer laws.
COSTS
Our thirdconcern is that it wouldimpose a costly and inefficient
system of administering those laws. The legislation's provisions dis
miss concerns about cost and efficiency by attempting to shift the
burden of collecting compliance data to the bank supervisors. That
15
dismissal ignores reality. Whether the banks collect the data orthe
supervisors do, the banks will wind up paying for it. If the OCC
does the data collection work as title IV envisions, we will charge
the banks for the extra time we spend through increased assess
ments .
EFFECTS ON SUPERVISION
Our fourth concern is that in calling for increased disclosure,
title IV would subject examiners to undesirable pressures - a con
cern which I have discussed in detail in my written statement.
EFFECTS ON GLASS -STEAGALL REFORM
When you introduced financial reform legislation in November of
last year, Mr. Chairman , you characterized the Glass-Steagall Act's
restrictions on competition between investment banks andcommer
cial banks as " a protectionist dinosaur"
from a bygone era" and concluded that "
and the American people deserve better.”
ership , this committee, and subsequently
and " a fossil held over
[ t] he American economy
Amen. Under your lead
the Senate, approved S.
1886 , which would provide the basis for the modernization of the
Nation's financial services industry. It would permit needed compe
tition between commercial and investment banks.
16
1
cannot afford to delay Glass-Steagall reform , particularly to solve
}
unrelated - although important - problems.
1
1
1
1
-2
diversification
for
.The
opportunities
their
will
banks
all
of
survival
the
-Steagall
Glass
by
assured
be
not
,b
repeal
ut
in
competitors
successful
make
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market
new
the
industry
aslonger
Ttronger
wait
we
he
.banking
-She
Glass
achieve
,t
repeal
to
banks
for
be
will
it
harder
teagall
.
market
services
financial
the
of
share
their
retain
to
compete
release
For
:on
8,a.m.
September
;1
988
0:00
OF
STATEMENT
ROBERT
CLARKE
L.
Before
the
5094
,H.R.
Unfortunately
full
the
achieve
to
impossible
it
make
would
Committee
-Steagall
Glass
of
benefits
,w
reform
this
hich
long
so
worked
has
structured
limit
to
T
is
legislation
proposed
. he
about
bring
hard
and
COMMITTEE
ON
H
BANKING
OUSING
,A
ND
AFFAIRS
URBAN
banks
of
number
the
could
that
new
use
actually
.It
powers
this
do
would
l
requiring
by
b
a
between
rating
CRA
its
of
approval
the
and
ank's
inkage
nonbanking
permissible
in
engage
to
applications
company's
holding
Uactivities
,a
system
proposed
the
use
to
permission
for
nder
. pplications
companies
holding
bank
by
powers
nonbank
the
ratings
CRA
average
even
with
have
necessarily
not
would
companies
holding
These
.
denied
be
would
meet
help
to
failed
.T
needs
credit
community
have
not
would
merely
hey
holding
bank
other
some
much
as
done
ar
on
.companies
scale
elative
INTRODUCTION
members
and
Chairman
Mr.
Committee
the
of
this
,Ia
here
tom
morning
of
IVart
Title
discuss
,p
5094
H.R.
legislation
reform
banking
the
that
F
,Urban
Banking
on
Committee
the
ainance
of
Affairs
nd
House
relative
powers
Linking
expanded
limits
ratings
CRA
and
.powers
banks
of
group
Ibpecific
this
elieve
asthat
to
be
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effect
harmful
is
it
commitment
s
unnecessary
as
improved
Congress
to
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performance
CRA
ine
,w
years
two
last
the
important
made
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CRA
under
responsibilities
its
of
performance
OCC's
the
in
improvements
for
need
Recognizing
the
and
improvement
resources
our
on
demands
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e
compliance
our
revised
have
a
in
program
examination
m
we
that
anner
the
strikes
believe
between
balance
right
safety
for
supervision
and
soundness
compliance
Aur
unlike
nd
for
5094
H.R.
approach
,o
.and
and
powers
new
in
interested
are
that
banks
by
both
compliance
encourages
conversations
We
from
know
with
our
.bankers
not
are
that
those
by
and
program
revised
attracted
have
matters
compliance
on
focus
our
the
attention
industry
the
of
will
changes
These
,r
planned
s
awe
in
esult
compliance
level
higher
of
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we
that
aware
are
Bankers
serious
believe
,and
compliance
about
we
motivated
has
this
their
take
to
them
Representatives
in
approved
serious
.The
July
has
OCC
this
about
concerns
,a
bill
the
of
portion
would
it
think
we
nd
unwarranted
unwise
be
and
to
.pass
provisions
its
troubling
The
most
bill
this
of
part
linkage
the
is
S
-RA
Glass
between
teagall
the
and
reform
Reinvestment
(CCommunity
).Act
,it
things
other
Among
have
to
likely
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changing
of
effect
the
al
from
CRA
of
purpose
that
aw
credit
community
balance
to
seeks
and
needs
soundness
and
safety
that
one
concerns
allocate
to
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credit
It
prescribe
also
would
unprecedented
in
detail
regulatory
bank
how
agencies
consumer
enforce
laws
i
mposing
,would
ac
inefficient
and
ostly
system
of
17
.
laws
those
administering
financial
introduced
you
When
legislation
reform
November
in
last
of
Chairman
Mr.
year
characterized
,y
ou
Glass
the
Act's
-S
teagall
restrictions
competition
on
investment
between
commercial
and
banks
p
...
as
rotectionist
dinosaur
nd
held
ossil
b
a"[]f
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ygone
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e
economy
American
and
people
the
leadership
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better
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deserve
Committee
his
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subsequently
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pproved
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industry
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and
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nd
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nd
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banks
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icompetitors
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and
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of
view
In
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Ho
,n
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made
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mandated
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operate
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Although
Glass
S
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will
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be
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the
industry's
problems
warticularly
can
e
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ill
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fford
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p
this
,delay
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pursue
a
important
lbeit
g
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It
estified
s
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this
before
, ven
May
Committee
earnings
e
though
banks
national
of
in
stabilized
profitability
,declining
1987
been
has
phenomenon
ap
ersistent
the
during
1980s
return
The
for
assets
on
national
median
the
.
bank
percent
.79
was
c
, ompared
1987
most
the
to
of
peak
recent
in
percent
.1.11
1980
Permitting
banks
those
in
compete
to
which
from
markets
now
are
they
prohibited
would
create
new
opportunities
income
for
expand
and
banks
that
markets
protected
more
earn
to
them
allow
rate
competitive
a
than
of
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of
rate
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for
return
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uses
other
find
capital
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for
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of
providers
ther
services
financial
subject
not
are
requirements
same
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to
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limitations
expansion
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proposed
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legislation
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Now
Title
contains
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repeal
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Ttronger
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competo
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of
share
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services
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market
HUnfortunately
, .R.
would
5094
make
impossible
it
achieve
to
full
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benefits
glass
s
teagail
reform
w
,-of
hich
Committee
this
worked
has
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long
into
the
examiner
'b
est
s
5094
H.R.
of
Implications
po
publication
for
collect
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requirement
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national
1,300
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assets
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our
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materially
Contrary
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Banking
House
of
summary
staff
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in
e00
banks
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required
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To
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businesses
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obtain
to
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examiners
department
llending
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the
misinterpreted
an
as
.f
over
confusion
,confidence
health
bank's
of
indicator
be
could
bank
the
in
assessment
,S. n
accurate
econd
performance
ab
of
CRA
jeopardized
ank's
better
with
Banks
records
CRA
have
would
cooperate
incentive
more
to
with
do
and
examiners
the
groundwork
make
to
.necessary
available
data
records
CRA
worse
with
Banks
such
have
not
.would
incentive
an
result
The
work
more
be
would
examiners
higher
banks
the
for
costs
.and
A
bankers
.exchange
examiners
the
and
aclthough
on
depends
between
andid
disclosure
public
hope
would
we
,h
candor
that
diminish
not
uman
has
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is
it
what
being
nature
some
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that
believe
to
ne
. he
effect
T
t
,w
litigation
of
threat
would
hird
hich
likely
negative
increase
,c
ratings
of
disclosure
public
the
threaten
also
with
ould
'edisclosure
examiners
of
.thoroughness
Fvaluations
,p
could
inally
ublic
bank's
'efforts
groups
community
of
focus
shift
the
from
performance
,
rating
numerical
needs
credit
community's
the
meet
to
helping
in
important
,there
Ironically
one
is
and
banks
the
which
in
sense
their
:iap
.supervisors
reforms
of
cost
entire
the
bear
not
All
s
ractical
have
,t
matter
will
agencies
regulatory
he
costs
the
of
some
absorb
to
reforms
agency
proposed
diverting
of
costs
the
-resources
management
reorganization
to
agencies
the
of
existing
,of
using
resources
staffing
initiate
implementing
,a
of
nd
policies
new
.the
resources
The
have
would
tasks
those
accomplish
to
necessary
our
from
diverted
be
responsibilities
soundness
and
at
worst
the
of
one
,safety
possible
times
record
time
when
banks
numbers
failed
have
number
al
and
arge
of
agency
che
and
,t
onsequently
.supervisory
to
OCC
the
cause
would
it
that
is
5094
H.R.
with
concern
major
Another
w
ould
inefficiently
.T
a
A
Subtitles
in
Bprovisions
he
nd
resources
use
in
agencies
banking
the
tell
,h
detail
fine
very
on
laws
administer
to
ow
attention
supervisory
need
banks
.problem
rin
,change
issues
aconsumer
adical
esulting
system
current
the
from
-dflearly
calendar
mandate
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banks
all
of
examinations
riven
,iC
we
schedule
aregular
on
banks
all
examined
exhaustively
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most
catch
would
e
c
overhaul
Aomplete
our
compliance
of
system
supervision
as
-proposed
the
by
mandated
considerable
at
come
would
-bill
to
sacrifice
effective
adequate
soundness
and
supervision
.safety
the
of
view
In
current
our
of
success
supervision
compliance
to
,approach
w
that
believe
e
,aBut
laws
banking
consumer
of
.violators
fact
the
after
least
t
to
abetter
is
there
have
not
do
we
-way
application
intensive
an
such
use
s
aacrifice
is
this
should
that
and
made
be
-not
.need
resources
limited
our
of
,t
Instead
relies
OCC
c
a
on
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he
ombination
evaluations
on
-s
off
and
activities
abite
of
procedures
ank's
.Moreover
laws
consumer
with
compliance
bank
assess
to
policies
,the
would
implications
bill's
request
to
banks
encourage
CRA
updated
an
application
,iC,inorporate
assessment
ac
of
t
.anticipation
urrently
20
not
We
do
introduce
to
need
into
banking
the
system
destabilizing
any
especially
-forces
when
concerned
is
public
about
of
safety
the
parts
services
financial
the
r
aindustry
Such
.of
estructuring
impose
would
on
at
public
the
large
associated
costs
with
banking
risky
ore
system
,am
unintended
outcome
an
would
that
inconsistent
be
clearly
the
with
with
requests
those
meet
to
us
for
impossible
be
would
limited
our
resources
.
intentions
the
of
Banking
Committee
.House
OCC's
of
heart
The
the
assessing
to
approach
compliance
level
Compliance
tshe
regulations
and
laws
all
,iwith
Program
of
selection
the
as
sample
tratified
d
national
-random
in
an
for
banks
epth
of
review
BRANCH
OF
NOTICE
CLOSURE
would
5094
require
n
aH.R.
that
ational
bank
customers
its
notify
and
p
OCC
the
roposed
s
aclosing
either
of
taffed
branch
at
ATM
an
or
days
90
least
proposed
to
prior
closing
date
.the
receives
OCC
the
If
a
complaint
valid
the
aabout
of
closing
b
,t
he
ranch
required
be
would
bank
d
aetailed
provide
to
analysis
activity
of
at
preceding
the
for
branch
p
,wrojection
athree
years
ith
level
expected
the
if
activity
of
branch
remained
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T
open
OCC
required
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determine
to
. he
the
if
would
sof
aclosure
result
erious
reduction
availability
the
in
their
accomplishments
and
efforts
compliance
.uncertainty
The
associated
in
selected
being
with
an
provides
sample
the
compliance
for
incentive
,
regularly
on
rely
to
having
without
examinations
,ischeduled
same
the
n
incentive
an
provides
IRS
by
audited
being
of
possibility
the
that
way
. his
laws
tax
income
the
with
compliance
described
in
Tfor
is
process
Office
our
report
the
detail
Committee
this
to
submitted
of
January
in
this
year
.
reforms
proposed
the
that
is
concern
policy
major
final
The
based
are
burden
cost
the
of
understatement
an
on
. The
compliance
CRA
banks
to
concerns
dismiss
to
try
provisions
proposed
and
cost
about
by
efficiency
of
burden
shifting
collecting
banking
the
to
data
compliance
.agencies
unrealistic
simply
is
That
,banks
another
or
way
one
In
.will
. If
examinations
compliance
increased
of
cost
the
paying
up
wind
OCC
the
will
,w
work
the
does
ultimately
e
through
time
our
for
banks
charge
,assessments
efficient
more
clearly
is
It
ab
of
indication
etter
. nd
data
,for
commitment
management's
bank
provide
to
banks
the
support
in
needs
credit
the
meet
to
helping
are
they
that
contention
their
of
community
,otheir
Realistically
data
basic
provide
can
banks
the
. nly
approach
.This
performance
their
evaluate
to
necessary
is
the
that
encourages
.OCC
services
d
I
a
such
. fhe
etermination
made
is
would
,t
OCC
look
to
have
feasibility
into
the
replacing
of
other
with
,branch
facilities
including
establishing
c
development
ommunity
.aThese
union
credit
provisions
would
apply
not
the
in
emergency
of
acquisitions
.case
Notification
On
Position
OCC's
The
Prior
believes
The
occ
that
should
banks
the
notify
of
public
close
to
plans
currently
,and
branches
we
national
encourage
the
advise
to
banks
close
plans
their
of
community
services
reduce
to
or
.branches
Through
Circular
Banking
ofssistance
a
,issuance
189
No.
trade
to
writing
groups
programs
such
on
handbooks
,a
means
other
by
nd
t
fostered
OCC
has
he
national
banks
to
'efforts
implement
and
develop
policies
notify
the
-10
-9
their
of
community
the
help
and
services
eliminate
or
reduce
to
plans
ordinarily
that
institutions
Depository
accounts
maintain
checking
would
$1,000
with
customers
service
checking
provide
to
required
be
or
.less
deposit
on
T
opened
be
could
aaccount
with
maintained
and
he
ten
$25nd
of
balance
,a
least
at
be
would
there
per
transactions
free
.month
account
the
on
interest
pay
to
have
not
would
Banks
.The
although
offer
institution
,d
require
not
could
it
of
deposit
irect
It
the
restrict
not
could
also
to
customer
payments
government
.recurring
machines
.using
teller
automatic
The
authorized
be
would
Reserve
Federal
.community
alternative
services
of
sources
secure
hor
appropriate
not
is
It
,f
governmental
other
any
or
-OCC
the
owever
body
banking
of
location
the
regarding
judgment
its
substitute
to
-owners
the
that
for
abfacilities
of
.managers
and
Bank
anks
are
offices
made
be
must
an
with
,a
businesses
private
locate
to
decisions
nd
branch
of
efficiency
the
and
towards
eye
ap
profitability
articular
.Although
bank
of
operations
overall
the
not
would
5094
H.R.
require
somewhat
its
that
concerned
,Iam
closures
branch
of
approval
OCC
position
in
us
putting
of
effect
the
have
would
language
imprecise
.
account
this
for
charges
service
establish
to
that
Depository
of
course
ordinary
the
in
checks
cash
institutions
business
Service
Cashing
Check
Government
the
offer
to
required
be
would
m
.-,p
decisions
private
rofit
gotivated
second
uessing
s,500
federal
for
,a
$1
to
up
of
checks
government
local
.When
nd
tate
provision
,t
Similarly
look
to
us
require
would
that
bill
the
of
he
would
services
sources
alternative
establishing
of
feasibility
the
into
be
the
by
taken
should
that
actions
into
occ
insert
inappropriately
.
check
.private
community
affected
,ientrepreneurs
sector
the
ncluding
some
If
amarket
profitably
serve
to
opportunities
are
there
believe
has
that
,there
others
by
abandoned
been
on
act
to
them
for
opportunities
ample
are
,mthat
Typically
new
attract
will
underserved
are
that
. arkets
belief
designate
where
branches
three
to
up
,the
registering
would
customer
allowed
tchecks
A
-d
be
would
fee
service
ollar
per
. wo
cashed
be
could
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services
these
of
each
For
would
ustomers
provide
to
required
be
signature
their
bearing
identification
.photo
data
basic
other
and
The
provision
Reserve
Federal
to
subject
be
would
services
these
of
safeguards
,and
regulation
certain
provides
bill
the
or
fraud
against
of
establishment
the
against
and
abuse
continuing
for
prerequisite
any
and
lowagainst
discriminate
would
that
account
the
opening
individuals
-income
moderate
account
other
without
those
.or
relationships
branches
or
charters
novo
de
from
either
services
.banking
competitors
of
acommunity
in
entities
private
of
initiatives
The
,i
its
ncluding
government
cnd
citizens
,a
groups
of
not
businesses
ommunity
the
are
-acommunity's
serving
to
solutions
of
source
best
financial
for
needs
notification
W
advance
that
believe
the
and
customers
to
.e
services
encourage
to
sufficient
is
community
affected
would
and
initiatives
such
avoid
and
banks
the
both
on
burdens
administrative
unnecessary
imposing
position
OCC
mandate
not
should
Government
that
services
be
to
have
,j
offered
ust
21
agencies
.the
should
it
as
firms
services
of
kinds
the
to
barriers
artificial
create
not
closure
Iam
branch
the
that
concerned
also
5094
H.R.
of
provisions
'b
banks
that
fact
the
ignore
apparently
am
reflect
decisions
ore
ranching
markets
.general
financial
of
restructuring
As
between
distinctions
,aIn
offer
can
of
area
the
in
date
to
it
s
.has
insurance
and
securities
services
,t
run
long
of
level
the
lower
requirements
ahese
nd
,iconsumer
importantly
More
Congressional
that
clear
not
is
.t
loses
ensure
to
needed
is
action
are
services
banking
that
.
available
widely
av
offer
now
banks
Many
low
of
ariety
-cost
,b
.T
services
banking
he
asic
.OCC
it
do
to
them
encouraged
has
this
Much
given
been
attention
. 987
communities
in
1need
A
Association
Bankers
American
the
by
study
banking
basic
offers
already
banks
two
every
of
one
that
shows
,
services
$1bIn
over
with
banks
ten
every
of
seven
.including
assets
in
illion
six
,the
addition
another
that
found
survey
to
plan
banks
all
of
percent
,banks
eroded
have
institutions
financial
specialized
formerly
other
and
forced
have
services
financial
of
providers
means
the
reconsider
to
been
.they
services
the
to
use
iTdeliver
changes
,s
part
large
from
nhose
tem
technology
new
of
use
innovative
the
services
financial
supplying
in
and
.from
firms
financial
among
competition
of
patterns
changing
New
alternatives
develop
institutions
financial
enabled
has
technology
to
the
for
branches
of
delivery
and
brick
expensive
on
-mrelying
ortar
. TMs
services
,Afinancial
example
For
their
to
access
consumers
offer
now
locations
avcannot
in
and
clock
the
around
accounts
.of
,oariety
Thus
ne
c
aommercial
that
assume
the
are
branches
bank's
suppliers
efficient
only
.
services
these
offering
start
CONCLUSION
to
services
financial
of
without
that
and
areas
local
s
, ervices
branches
.will
available
not
be
goals
,Ibelieve
Chairman
Mr.
the
by
attained
be
could
that
importance
-S
Glass
the
repeal
Act
such
of
are
teagall
attention
our
that
closing
,l
Finally
branch
on
wimitations
indirect
or
direct
hether
withdraw
to
harder
it
make
am
from
.,s
failing
of
Sarket
hort
uch
measures
-p
counter
always
are
,m
more
marginally
profitable
branches
roductive
aking
from
diverted
be
not
should
.want
task
this
We
benefits
consumer
the
I, ndeed
m
a
by
.provided
industry
services
financial
competitive
ore
amore
creating
by
-1886
S.
with
industry
services
financial
competitive
tbill
a.pro
is
-products
securities
to
respect
-cIruly
onsumer
of
however
reiterate
w
sale
the
to
respect
ith
,b
products
insurance
oth
and
House
the
are
bills
Senate
-c
anti
terribly
onsumer
i
,and
addition
n
.
ventures
risky
SERVICES
BANKING
BASIC
discriminatory
.
a"H.R.
establish
to
banks
require
would
5094
Services
Financial
asic
B
"f
Account
or
i
-lowmoderate
Tncome
would
account
his
.and
customers
transaction
ab
asic
service
: nd
services
separate
two
government
,entail
.
services
cashing
check
-11
bank
need
we
nd
,a
industry
banking
efficient
and
ealthy
h
We
the
in
inefficiencies
reduce
that
structures
and
policies
regulatory
and
safety
while
assuring
competitors
efficient
reward
market
athey
are
,b
well
as
important
needs
credit
Community
. ut
soundness
banking
m
alimit
of
attainment
our
not
must
We
. odern
matter
separate
objectives
CRA
of
meet
can
We
achievement
the
to
it
linking
by
system
.would
provide
5094
H.R.
that
structure
the
under
not
ut
,b
goals
both
new
utilize
could
that
banks
of
number
the
limit
would
5094
H.R.
create
would
.-S
repeal
teagall
Glass
of
benefits
the
educing
r
,It
powers
It
would
.make
sense
no
costs
added
such
when
banks
all
for
new
and
of
safety
protection
the
from
resources
divert
regulators
bank
make
i
,change
CRA
of
objectives
the
would
it
And
. ncreasing
soundness
,that
would
w
a ay
in
decisions
lending
private
interference
regulatory
.and
annot
,Icndermine
reasons
these
soundness
safety
bank
u
,For
fear
we
.of
5094
H.R.
IV
Title
provisions
the
many
support
23
APPENDIX
Assessment Factors &
TWELVE ASSESSMENT
1)
TACTORS
Bank activities that ascertain the
credit needs of its local community .
Examination Procedures
EXAMINATION PROCEDURES
Obtain Information from a review of bank
records and interviews with bank statt .
( Studios /customers / neighborhood groupe /
local government )
2)
3)
The extent of the bank ' , marketing
and special credit - related programs
to make community members aware of
credit services available .
The extent of participation by the
Roview bank's marketing prograa .
( RE brokers /mtg counsellng programul
advertising / convenient hours /brochureo )
Review minutes of board of directors
meetings and any other bank
documentation available .
( Bank otatt
avareness of CRA )
5)
Any practices intended to discourage
applications for credit listed in
the bank ' , au otat cuent .
Review other fair lending armination
The geographic distribution of the
Initially rely on discussion with
programs ( DCOA and Fair Housing Act ) .
( Bank staft awareness of Cw / proscreening )
bank ' . credit ont ensions , credit
applications and credit denials .
6)
Evidence of discriminatory or
other illegal credit practices .
Review prior reports of examination and
other examination programs currently being
performed .
7)
The bank's record of opening and
closing offices and providing
Obtain information from the flold or
district office or from the bank ' , records .
services at offices .
Review any public comments .
TEELVE ASSESSMENT TACTORS
9)
10 )
EXAMINATION PROCEDURES
Bank participation in local
community development and
redevelopment projects or programs .
Review written lending policy and procedure
manualo . Interview londing offloori .
The bank's origination of
Review bank financial statcounts , MIDA
disclosures , lending policy and procedure
manuals . Intervlow bank statt .
Bank participation in governmentally
Inoured , guaranteed , or subsidized
loan program for housing , small
businesses or email tam .
( HUD ' , community development block grant
program / local neighborhood preservation
efforts / CDCo / neighborhood housing servicos )
Raviow bank financial statemente , DA
disclosures , lending policy and procedure
manual..
Interview bank statt .
(mm /
11 )
The bank ' , ability to meet community
Review examination workpapers and
reports . Consider safety and soundness .
( Small banks may lack resources )
12 )
Other factors that boar upon the
Consider factors such as bank purchases
of state and municipal bondo , secondary
mortgage market securities or whether the
art ont to which I national bank
is helping to meet the credit needs
of its entire community .
bank's policies promote afforts to assist
existing residents in neighborhoods
undergoing reinvestment and change .
24
The CHAIRMAN . Well, thank you very much, Comptroller Clarke.
25
expand and provides a vehicle for public participation in the
review of the institutions' CRA performance.
26
of accomplishment in meeting their responsibilities under the CRA
on a regular basis.
This approach also has the advantage of simplicity and could
TITLE IV HAS FOUR BASIC PROVISIONS
Title IV of the House bill establishes a framework that includes
four basic parts:
27
and would result in an excessively protracted administrative proc
ess .
ADDITIONAL RECOMMENDATIONS
First, the specific data collection requirements of the bill should
not be implemented. In place of this rigid format which has the
effect of limiting lending flexibility , financial institutions should be
permitted to collect and make publicly available whatever data is
appropriate to demonstrate their record of meeting the credit needs
of the community that the institution has identified and targeted .
90-163 0 - 88 - 2
28
local communities in a manner that is nondiscriminatory and con
sistent with the principles of safe and sound banking practice.
Thank you.
1
delivery
on
release
For
,E.D.T.
a.m.
10:00
1
8, 988
September
,Iappreciate
Chairman
Mr.
appear
to
opportunity
this
various
the
address
to
Committee
Banking
Senate
before
reported
IV
,r
5094
H.R.
of
ecently
Title
provisions
consumer
.by
Committee
Banking
House
the
place
ill
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testimony
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In
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1977
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Act
Community
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on
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and
implemented
CRA
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CRA
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ow
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t
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ill
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of
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oard
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Vice
Chairman
Ido
not
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n
,iIV
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bill
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of
Title
in
included
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provisions
29
concern
of
degree
lesser
any
convey
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new
regulatory
, lso
CRA
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Urban
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ousing
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asic
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cashing
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requirements
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eank
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qual
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Senate
S.
U.
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burden
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m
constitute
awhole
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hese
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1
, 988
8
September
w
requirements
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regulatory
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handle
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serious
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,of
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at
requirements
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as
astaff
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as
.well
appendix
-2
-3
FRAMEWORK
CURRENT
THE
CRA
meaningful
efforts
assure
to
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aware
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facilities
and
steps
take
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discussing
suggestions
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credit
needs
n
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manner
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would
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helpful
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CRA
sound
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Board
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fully
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current
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discuss
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implement
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BOARD'S
THE
IMPLEMENTATION
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uide
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ameaningful
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rogram
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credit
needs
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30
responsibilities
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under
anda
,
institutions
identify
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onsistent
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ions
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eposit
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ehicle
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credit
bank's
of
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existence
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1987
in
35
to
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only
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of
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noted
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examined
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rehabilitation
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banks
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in
lending
development
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opportunities
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education
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implement
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techniques
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contribution
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resources
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banks
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companies
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activity
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work
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corporations
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identified
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32
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familiar
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Comptroller
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ver
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alone
Community
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subjects
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1987
In
Affairs
Officers
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at
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and
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articularly
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2
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to
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encourage
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Programs
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4
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s
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t
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n
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work
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11
companies
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context
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the
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In
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34
needs
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ying
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e
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rochures
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osters
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Despite
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olending
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ineed
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68
H.R.
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2
69
HowTo GetA Cash Refund
Apply at First Union.
Loans are designed for low- tomoderate
incomefamilieswhoqualify.
Borrow from $ 1,500 to
$ 15,000.Useitto improve,protect,
ormake your home more energyefficient.
Get up to five years
to pay. Benefit from our favorable,
variable rates.
Make all payments
allor visit First Union and ask about ourVery
you
service that'sfast. Uncomplicated. Convenient. And
very personal.
T
FIRS .
M
1987First Union Corporation
First Union NationalBank
of Georgia
70
No Minimum
Checking.
N
BE
N
O
T
N
paU
Vow you don't have to
keep a large minimum balance
in your checking account just to
avoid high service charges. You
can open our No Minimum
minimum benefits. In fact,
• Free First Union 24 Hour
we've added plenty:
• No minimum balance
.
• Low $ 3.50 monthly main
Checking, pay only a low $ 3.50
monthly inaintenance fee and
have full use of all your money.
And at First Union , no
minimum balance doesn't mean
*11 you wnile mure than ten checks per
T
FIRS .
slutementperiod, acharge of Artycenas
peradditional check will be assessed.
Member FDIC
New Banking Power ForYou ."
First Union National Bank
of doorgia
1988 First Incon Corpuratiun
Runs 6/2 and 1616 issues Atlanta Inquirer, Augusta Focus, Acx 15 " BW
1
71
CHECKING
PERSONAL
Description
-
NO MINIMUM CHECKING
A No Minimum Checking account is :
.
Eligibility
Requirement
Account available for personal accounts only .
125
Features
.
Minimum deposit required to open account is $ 50 .
No minimum or average balance required .
No charge Accidental Death Insurance Coverage of $ 1,000 .
Deposits and withdrawals can be made through a 24 Hour
Banking Machine free of charge using a First Union Banking
Card .
Instant Cash Reserve may be affiliated with account to
.
provide overdraft protection , if customer qualifies .
May have automatic settlement of First Union Brokerage
Service transactions through this account .
Monthly detailed statement of account transactions .
May be linked to a personal savings account for a combined
statement .
10 free posted checks per statement period . ( No charge
for drafts . )
.
Check Safekeeping is required .
.
3 free check copies per statement cycle if customer needs
copies .
May not be used as collateral on loans .
.
Prospects
Monthly
Individuals with minimum check writing needs such as
This account is subject to two types of monthly charges .
Service
Charge
•
•
A 3.00 maintenance fee, regardless of account balance , and
$ .50 per check after the tenth posted check in a statement
There are no charges for First Union Banking Machine
withdrawals . However , the account will be charged for each
Relay transaction , regardless of the number of posted checks .
RSPM - 3/88
118.40 - 1
HR 509
CHECKING
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NO
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73
N
O
N
Two Great Services
to Make First Union First With You !
Checking with No Minimum Balance
✓
✓
The Loan that's on the House
74
You CAN BANK ON FIRST UNION TO
With your First Union 24 -Hour
Banking Card, you've got a key to
the bank that you can use any day,
any time, almost anywhere. Through
out Georgia , First Union has over
100 24 Hour Banking machines as
well as over 1200 AVAIL SM locations
where you can use your 24 Hour
Banking card . There is a minimal
AVAIL S service charge of 75€ per
withdrawal and 45 ° per inquiry at
automated teller machines other than
First Union . As an added con
Now you can enjoy all the convenience
of a First Union checking account and a
First Union 24 - Hour Banking Card . . . for an
unbelievable $ 3.50 a month ! No minimum
balance required — yet you can write ten
venience, you can also use your 24
Hour Banking card at over 1800
Relay locations throughout Georgia,
North and South Carolina and
Virginia.
checks every statement period at no
charge !
No Minimum Checking ...
and 24 -Hour Banking!
A Very Special Loan
On the House
75
MAKE YOUR MONEY WORK FOR You
all the payments you've made during
a calendar year if, during that year,
you were not 30 days late on making
any payment.
Howcan you find out if you qualify
for this Very Special Home Improve
ment Loan? Just visit your nearest
First Union office and talk to the
Loan Officer. He has a listing of the
maximum allowable family income
for this loan in your county so he'll
very quickly be able to tell you
whether your income allows you to
qualify for First Union's Very Special
You've got a new source of funds,
$ 1,500... $ 15,000... or more, that you can use
for remodeling.
-
Home Improvement Loan! Don't wait
the faster you come to First
Union , the faster you could have a
more comfortable home to live in!
-
-
Let a First Union banker work with you to meet
your financial needs.
76
First Union Banking Locations Nearest You
COLUMBUS
404-571-6500
HAMILTON
404-628-4221
Main Office , 101 13th St.
Benning Park Ofc. 2406 Cusseta Rd .
Buena Vista Office, 4902 Buena
MACON
912-742-6361
Vista Rd
Main Office , 455 Walnut St.
Columbus Square Otc., 3054 Macon
Rd
Medical Center Otc ., 10th Ave. &
18th St
North Columbus Ofc . 1914 Airport
Thruway
Peachtree Office. 3471 Courtyard Way
St. Francis Office , 1969 Manchester
Hamilton Office , Hwy. 27
Eisenhower Office ,
1489 Eisenhower Parkway
First Central Office, 756 Poplar St.
Kroger Supermarket,
3670 Eisenhower Parkway
Kroger Supermarket,
4650 Forsyth Rd .
Kroger Supermarket, 660 North Ave.
Expressway
Northside Office 3998 Northside Dr.
Wynnton Office , 2450 Wynnton Ad .
ATM Kroger Supermarket,
ATM Allendale , 5840 Moon Rd
ATM Reese Road , 4410 Macon Rd
Broad St.
3076 Riverside Dr.
PINE MOUNTAIN
404-663-2221
102 Broad St.
WAVERLY HALL
404-582-2666
FORT BENNING
Jordan St.
ATM St. Mary's. 96 North Oakley Dr.
CUSSETA
404-989-3636
Cusseta Office. Anderson St. &
Waverly Hall Otc ., O'Neal Dr. &
404-682-1135
Ft. Benning Mall Otc.. 9230 Marne Rd.
Ft. Benning Office , 109 Wold Ave.
ATM Building Four , Eckel St.
ATM Sand Hill, 3218 1st Airborne
Div . Rd
T
FIRNSIO. N
U
First Union National Bank
of Georgia
Member FDIC
Equal Housing Lender
Equal Opportunity Lender
BULK RATE
U.S. POSTAGE
77
FIRST UNION NATIONAL BANK
needs of our various communities. This will include, from
time to time, formal and informal research , sponsorship
of surveys and studies, meetings and /or discussions with
neighborhood associations, community based groups,
development corporations, local and regional govern
The Board of Directors of First Union National Bank of
North Carolina recognizes the Bank's continuing and af
firmative obligation to help meet the credit needs of its
community, including low and moderate income neigh
borhoods, consistent with the safe and sound operation
of the Bank as set forth in the Community Reinvestment
ment agency officials, religious associations, real estate
brokers, and other community related groups that repre
sent the needs of low and moderate income individuals
Act of 1977 and the implementing regulations. In order to
implement this policy, the Board of Directors has adopted
the following statement:
ANNUAL REVIEW OF
COMMUNITY REINVESTMENT
LOCAL COMMUNITY
The local community served by this office is delineated
as the entire county in which this office is located .
CREDITS
The Bank offers the following types of credit services to
qualified applicants in this community:
COMMUNITY REINVESTMENT
You Should Know That:
DETERMINING COMMUNITY
78
community credit needs to :
WE WOULD LIKE TO HEAR FROM YOU
First Union always welcomes your opinions on how
we're meeting the needs of this community, and sugges
tions for new ways to serve you. After writing your com
ments below , please sign your name, detach this card ,
and mail it to us. Abank representative will respond
And to the
directly to you about your ideas.
COMMENTS
Your letter together with any responses by us, may be
made public.
HOME MORTGAGE
NAME
ADDRESS
CITY
STATE
PHONE
ZIP
79
A Very
Special Loan
ON THE HOUSE
01
T
FIRNSION
:
U
First Union National Bank
of South Carolina
First Union offers Home
Improvement Loans for low
to moderate income
families **
Secured and unsecured loans, if you
cmber FDIC
Equal Housing Lender
Equal Opportunity Lencer
RO
LENDER
qualify, Borrow from $ 1,500 to $ 15,000.
Use the money to improve your home.
Pay from 1.25% to 2.5% over the
current Prime Rate : Get a 1.5% refund
for keeping up payments. Take from five
years to 12 years to repay.
" Do you qualify ? See the back page!
80
A Very
Special Loan
Interest rates ? More good news. On
loans under $ 6,500 you pay just 2.5%
over Prime Rate
And on loans of
$ 6,501 and up, you pay just 1.25 % over
Prime Rate ( The Prime Rate* may
vary from time to time.)
ON THE HOUSE
If you live in your own single family
home and have a low to moderate
family income, ( no more than 80 % of
the median in your county - see the
back page) First Union has a Very
Special Home Improvement Loan
from $ 1,500 to $ 15,000, subject to basic
qualification guidelines — a loan that
you can use for alterations, repairs, or
improvements to your home! ( Note:
Loans may not exceed 85 % of the value
of the property after improvements and
-
less any mortgages .)
-
* First Union National Bank of South
81
A Very
You qualify if:
Special Loan
ON THE HOUSE
You can borrow on your
signature:
COUNTY
MAXIMUM FAMILY INCOME TO QUALIFY
( 80 % OF COUNTY MEDIAN )
Abbeville
Alken
$ 20,276.3
15,068.5
Anderson
21,820.2
Bamberg
16,403.3
21,613.7
26,040.1
19,187.4
Beaufort
Berkeley
Calhoun
Charleston
Cherokee
Chester
Chesterfield
Clarendon
Colleton
Darlington
You can take a mortgage:
Dillon
Dorchester
Edgefield
Fairfield
Florence
Georgetown
-
Greenville
Greenwood
Hampton
Horry
Jasper
Kershaw
Lancaster
Laurens
Loe
Lexington
REWARD !
McCormick
Marion
Marlboro
Newberry
You get back 1.5% of what you've
paid in any year that you've kept up the
payments — that is, haven't become 30
days delinquent.
23,041.6
Allendale
Oconee
Orangeburg
Pickens
Richland
Saluda
Spartanburg
Sumter
Union
Williamsburg
Yo: k
22,139.6
21,741.0
20,804.3
18,348.4
16,397.2
16,951.2
19,425.5
16,324,4
22,489.4
18,242,1
19,483,8
19,743.3
23,174.0
23,915.2
22,294.9
16,928.0
19,651.0
18,355.0
21,710.2
22,270.1
21,580.6
17,650.4
28,884.0
17,978.5
16,954.0
17,297,6
17,297.6
20,886.1
17,092.5
24,214.3
23,258.2
17,935.5
22,119.6
17,660.1
20,437.6
16,938.7
23,184.8
82
4522D
DRAFT
Tentative Effective Date 11/1/87
FIRST UNION CORPORATION
GEORGIA CRA UNDERTAKING
First Union hereby affirms its dedication and commitment to
the communities in which it does business and to the Community
Reinvestment Act . First Union has a long and proud tradition of
active leadership in the communities and states in which its
offices are located . As First Union expands into Georgia , it
believes it is important to carry forward its tradition of
meeting the credit needs of its entire community , including low
and moderate income neighborhoods , consistent with the safe and
sound banking operations ,
and to that end makes the following
statement :
1.
Determining Community Needs
First Union , through its Georgia subsidiary bank , from
time to time will conduct community needs
studies in metropolitan areas
2.
assessment
Outreach and Marketing
First Union , through its subsidiary bank , will use its
best efforts to inform low and moderate
income groups
and minority businesses
of
and
communities
its
basic
lending programs and other services .
For
instance , the commercial call program of the Georgia
subsidiary bank will include minority businesses and
community development agencies and corporations . First
banking ,
Union will endeavor to employ minority advertising
marketing firms to assist it in these efforts .
3.
or
Innovative Lending Programs
( a)
First
Union
further
acknowledges
the
need
for
innovative lending programs for low and moderate
income individuals and groups and minority busi
ness enterprises , including home mortgage lending
and
neighborhood and residential rehabilitation
lending .
First Union has
long supported such
programs in North Carolina and pledges to provide
such support
itself
and through its subsidiary
bank in Georgia .
This type of community support
83
is indicative of First Union's commitment to its
communities and with which it has a long history
in the State of North Carolina .
First Union will
seek opportunities in its market area in Georgia
to provide similar community support .
( b)
First Union agrees to make every reasonable effort
to conduct a loan program which is responsive to
the growing credit needs of the low and moderate
income
areas
its
of
subsidiary
bank's
market
This program is intended to provide loans
for
low
and
moderate real
incomeestate
housingprojects
, small . busi
and commercial
ness
areas .
use
as
( i)
( ii )
1 to 4 family structures
home improvement loans ,
Housing Development
rehabilitation
home mortgages ,
loans
loans
and
construction and
permanent
mortgage
financing to be made available to non- profit
and other developers for new construction and
rehabilitation of housing for low and moder
ate income and minority residents in qualify
ing areas .
( iii )
( c)
Small
Business
loans
for
businesses
with
First Union recognizes the importance of community
development corporations or other similar organi
zations
and will provide both financial support
2
84
and technical assistance to such corporations or
organizations .
Such support may be in conjunction
other banks or companies , or in cooperation
with non - profit organizations or state and local
with
agencies .
Financial support may be in the form of
investment or contributions .
( d)
Supplementing the effort will be a minority enter
prises lending policy providing that any lending
officer may approve a minority enterprise loan
his or her lending limit with the further
proviso that in order for a minority enterprise
loan request to be turned down the concurrence of
at least two lending officers will be required .
In addition , each regional office in Georgia will
designate or have access to at least one lending
within
officer
( e)
to
The bank's credit training programs will include
pertaining to its policy regarding
low and moderate income groups and to
minority businesses SO that appropriate personnel
will be aware of
the bank's objectives in this
information
loans
to
Through education and information programs
loan officers and other bank officers will be kept
advised of their responsibilities under the Com
munity Reinvestment Act and fair lending practices
area .
laws .
( f)
Each regional office will have access to a lending
resource
person whose principal responsibility is
to assist and inform bank lending officers , and to
assist customers and potential customers with such
programs as :
( i)
Small
Business Administration
loan programs
and certified development company programs ;
( ii )
Neighborhood Housing Services Programs ;
( iii )
Urban Development Action Grants ;
( iv )
Community Development Block Grant Programs
for housing and economic development ;
( v)
state
Specialized
programs ; and
( vi )
Other
available
and
minority ,
county
low and moderate
income , and government loan programs .
3
mortgage
85
4 .
Local Boards
In
an effort to further improve communications between
First
Union's
subsidiary
bank
and
low
and
moderate
income groups and minorities , the subsidiary bank will
seek individuals to elect to its local boards from low
and moderate income groups , minority groups or other
community involved groups which are representative of
low and moderate income groups and minority groups . It
shall be the goal of the subsidiary bank in Georgia to
place one such individual on each of its local boards
as soon as is reasonably practical .
5 .
Annual Reviews of CRA Compliance
It shall be the policy of the Georgia subsidiary bank
to have annual reviews of its Community
Act Statement , policies and procedures .
review shall be
6.
Reinvestment
Such annual
Charitable Contributions
First Union will continue the same commitment towards
charitable giving that
7.
Basic Banking Services
First
Union
supports the concept of providing basic
banking services on a reduced cost basis , directed
towards low and moderate income groups and will intro
duce such basic banking services in its markets in
Georgia as soon as reasonably practical .
8.
Counseling
First
Union
believes
that
financial
institutions
can
properly and usefully play an important role in assist
ing
low
and
moderate
income
borrowers
and
customers
86
through the support of credit counseling and similar
First
consumer services offered by third parties .
Union will seek ways to support community based non
counseling
financially
profit
services
9 .
Communication Process
First
Union
and
acknowledges
dialogue
meetings ,
group
increased
conferences ,
an
usefulness
of
open
produced
seminars
and other forms
First Union is
interested
communication .
maintaining
the
understanding
by
of
in
open
a
5
87
Commercial Loans
Section
Minority Business Loans
Subject
Policy
Summary :
First Union National Bank is committed to assisting minority
businesses be viable , profitable and valuable members of our
various communities .
This commitment is best demonstrated
by aggressive and innovative support of the credit and
management assistance needs of minority businesses .
1.
Background
Since 1973, First Union has had in place a written Minority
Loan Policy . As the result of continuing changes in the
Bank and the communities we serve , it is appropriate that
this policy be revised and expanded to comply with the
Bank's commitment to serve the convenience and needs
of the entire community without regard for race , creed ,
sex , national origin or economic status of the customer .
Minority Business Defined
The term " Minority Business" refers to those businesses
owned by Native Americans , Blacks , Orientals , Hispanics
and low and moderate income individuals .
Ill . Loan Approvals
IV .
Loan Declines
V.
Communication With the Applicant
In those cases when a loan is declined , it is the responsibility
of the lending officer to fully explain to the applicant the
reasons for the decline . If possible , the applicant should also
be shown those factors , which , if improved , would enhance
the application .
VI .
Greater Than Usual Risk
Historic experience has shown that regardless of ownership ,
loans to small and new businesses have a higher - than -average
degree of risk . Within credit policy and prudent lending
practices , the loan officer is encouraged to take an innovative
approach to these credits in order to develop a loan structure
where the risk is acceptable . This should include a plan for
proper account servicing .
88
VII .
Assistance to Minority Business
VIII . Each city office will designate or have access to at least one
89
3090D
PIRST UNION CORPORATION
NORTH CAROLINA CRA UNDERTAKING
In response to expressed concerns of certain individuals and
community groups , First Union renews its dedication and commit
ment
to
the
communities
in which
it
does
business
and
to
the
Community Relovestment Act .
First Union has a long and proud
tradition of active leadership in the communities and states in
which
its
offices
are
As
located .
First
Union
expands ,
it
belleves 1t 16 laportaat to carry forward this tradition in
North Carolina of Reeting the credit needs of its entire con
Buaity. lacluding low and noderate income neighborhoods . Con
sistent with the safe and
sound banking operations , and to that
end makes the followlag statement :
1.
Determining connunity Needs
first
Union ,
through
its
North
Carolina
subsidiary
bank , from time to tine will conduct community needs
assessneat
studies
10 metropolitan areas of North
Carolina where it conducts its
banking operations ,
seeking to determine banking product and credit reeds
of low and moderate income groups and niporities within
these areas .
The bank's studies will laclude those
portions of municipalities and counties in the bank's
market areas which have median household incones equal
to or less than 80% of the median household lacone for
the SMSA or county in which the household is located .
These studies will be conducted by First Union or by
third party consultants under contract to First Union .
The order of priority for these studies will be deter
ained by First Union and the studies will include input
from community based organizations , community develop
nent organization
s and other interested
parties .
The studies will
or concerned
commence within the second
and third calendar quarters of 1986 and will be con
pleted within a reasonable period of time thereafter .
2.
Outreach and Marketing
First Union , through its subsidiary bank , will use its
best efforts to inform low and moderate income groups
and the minority connunities of its basic banking ,
leading programs and other services . This effort will
laclude innovative advertising , and marketing efforts
of programs directed toward low and moderate income
groups
and
minority
connunities .
Por
instance ,
the
90
connercial call program of the North Carolina subsid
lary bank will include minority businesses and com
First
munity development agencies and corporations .
Union will use its best efforts to employ minority
advertising of marketing firms to assist in implement
ing these advertising and marketing efforts with the
goal that no less than 10%
of the contracts to outside
suppliers used by the subsidiary bank in these efforts
be awarded to minority advertising or marketing firms .
.
3.
Innovative Lending Programs
( a)
First
Union
further
acknowledges
ex
concerns
for innovative
and
for
income
noderate
low
and
groups
minority business
pressed with respect to
leading
programs
the
need
individuals
and
enterprises ,
including home mortgage lending and
and
neighborhood
residential
lending .
First Union has long
rehabilitation
supported such
programs in North Carolina and pledges to continue
such support with
leadership . volunteer
commit
and funding in partnership with community
development Corporations , state and local develop
ment agencies and other representative groups and
agencies .
This type of community support is indi
ment ,
cative of First Union's connitnent to its communi
ties and with which it has a long history in the
State of North Carolina .
First Union will seek
new opportunities in North Carolina to continue to
provide sinilar community support .
( b)
First Union agrees to make every reasonable effort
to conduct a loan program which is responsive to
the growing credit needs of the low and moderate
income areas of its subsidiary bank's market
areas .
This program is intended to provide loans
which are targeted for low and moderate income
housing . small business and commercial real estate
projects . The program will include those portions
of municipalities or counties of North Carolina
which have median household incomes equal to or
less than 80% of the median household income for
the county of SMSA in which such municipality is
located .
The
bank
will
use
1ts
general
under
writing criteria , terms and conditions 10 this
program and will use its best efforts to be as
innovative and flexible as possible
in applying
prudent
banking
lending practices and safe
operations , the bank will make reasonable efforts
to qualify loan requests presented to the bank
pursuant to this program . with respect to small
such
standards .
Within
2
the
bounds
of
and
sound
91
business
loans
which
are
( 1)
.
( 111 )
Small
Business
loans
for
businesses
with
under $ 5 million in annual sales in qualify
areas .
Loan categories
will include
building construction , building improvement ,
machinery / equipment, and working capital .
ing
The bank will endeavor to make favorable pricing
available on loans under this program .
As a part
of this program , the bank may seek other banks to
participate with it and may seek government and
other
alternative
resources .
This
program
may
provide grants , loan guarantees or interest write
downs .
)
(c
First Union recognizes the importance of community
development Corporations and intermediary develop
nent organizations and will provide both financial
support and technical assistance to such corpora
or organizations .
Such support may be in
tions
conjunction with other banks of companies , or in
cooperation with non - profit organizations or state
and local agencies . Financial support may be in
the form of investment or contributions .
( d)
Supplementing the effort will be a ninority enter
3
90-163 О
- 88 - 4
92
at least two leading officers will be required .
In addition , each city office 10 North Carolina
will designate or have access to at least one
lending officer to be responsible for monitoring
the availability of minority loan programs to
assist the bank or minority businesses .
( e)
The bank's credit training programs will include
( f)
Managenent
assistance ,
such
is
( g)
Each
( 1)
city office will
to
have
access
Small Business Administration loan programs
and certified development company programs ;
( 11 )
Neighborhood Housing Services Programs ;
( 111 ) Urban Development Action Grants ;
( iv)
Community Developaent Block Grant Programs
for housing and econonic development ;
( v)
Specialized
programs ;
( vi )
state
and
county
mortgage
and
Other available minority . low and noderate
lacone , and government loan programs .
93
Local Advisory Boards
In an effort to further improve communications between
First Union's subsidiary bank and low and moderate
income groups and minorities , the subsidiary bank will
seek individuals to elect to its city advisory boards
from low and moderate income groups , minority groups or
other community involved groups , which are representa
tive of low and moderate income groups and minority
These efforts will begin within two months and
groups .
a minimum of one such individual will be elected to the
advisory boards 10 Charlotte , Raleigh , Wilmington ,
Winston- Salen , Greensboro , and Asheville with a goal of
accomplishing this by December 31 , 1987 .
It shall also
be the goal of the subsidiary bank in North Carolina to
place one such individual on each of its other city
advisory boards as 80on as
5.
Annual Reviews of CRA Compliance
It shall be the policy of the North Carolina subsidiary
bank to have annual reviews of its Community Reinvest
Statement , policies and
Act
nent
be
6.
Charitable contributions
First Union will continue the same commitment towards
charitable giving that it has employed in North
Carolina for many years . First Union evaluates indi
vidual applications for contributions and makes deci
sions
regarding then after considering need and
potential for positive impact , financial responsibility
and similar related factors .
An important part of
First Union's commitnent to community services is its
desire to assist the needy and handicapped and to pay
particular attention to the needs of community oriented
and community based organizations .
7.
Basic Banking Services
First Union supports
baoking
services
On
the concept of
a
reduced
cost
providing basic
basis ,
directed
towards low income groups and senior citizens and will
continue
its
efforts
to
services to narket..
5
bring
such
basic
banking
94
8.
Evaluation of Underwriting Criteria
First Union will engage in an . evaluation of its credit
and underwriting criteria and the credit needs of the
CORRunities
in
its
market
First
areas .
Union's
evaluation of the criteria will be based upon its own
past experience in establishing and implementing such
criteria , safe and sound banking practices, and will
reflect laput from the connunities served by the bank
through the connunity needs assessments perforned by
first Union .
9.
Counseling
First
Union
believes
that
financial
institutions
can
properly and usefully play an important role in assist
ing
low and
moderate
lacone
borrowers
and
customers
through the support of credit counseling and similar
services offered by third parties ..
First
Union will seek ways to support community based non
counseling
profit
services
financially
consumer
10 .
CORRunication Process
First
acknowledges
Union
and
increased .
dialogue
11.
the
usefulness
understanding
of
open
by
Monitoring
First Union will hold quarterly meetings for one year
with counsel for the concerned groups and individuals
to monitor læplementation of this undertaking.
If the
needs assessments provided for in Paragraph 1 of this
undertaking are not substantially completed at the
expiration of a one year period , then the monitoring
period will be extended for one additional quarterly
neeting .
Such representatives will a8818t First Union
10 presenting its compliance efforts to other concerned
groups or parties should further questions be expressed
with respect to First Union's CRĀ
Carolina .
6
compliance in North
95
INTEROFFICE MEMORANDUM
To
Distribution
John R. Georgius
Office
Office
Subject
From
Community Reinvestment Act ( CRA )
Date
Jeg
December 18 , 1986
All of you are aware of the Community Reinvestment Act ( CRA ) and First
Union's recent " Undertaking" that reaffirms the Bank's commitment to the
principles and requirements of CRA .
The success of First Union's efforts to support the principles and requirements
of CRA and the Undertaking is dependent on your commitment to implementation .
Successful implementation means that you must be responsive to inquiries con
cerning CRA and maintain a positive attitude toward these responsibilities .
Recently the Office of the Comptroller of the Currency conducted an examination
that focused on our CRA compliance . We were judged in compliance , confirming
our prior history and commitment to serving all segments of our communities .
CRA will continue to get special emphasis from examiners as well as consumer
activist groups . Less than full compliance could hinder efforts to expand
our interstate banking network . This makes our commitment to comply
with the Act and the Undertaking all the more important. Also , it is
increasingly important that we be able to document our CRA related activities
whether they be loans, volunteer work in our communities or contributions.
To assist us in compliance with the Undertaking and CRA , First Union
is unique among North Carolina banks in developing innovative banking
products . No Minimum Checking and our low /moderate income home improve
ment loan program were developed to insure that we have products available
for all economic segments of our communities.
The Undertaking speaks directly to the need for innovative lending programs
for low and moderate income individuals and minority business enterprises .
First Union has had a minority business loan policy since 1973. To comply
with the Undertaking , this policy has been updated with expanded
responsibilities for our loan officers and managers. A copy is enclosed .
Compliance with our minority business loan policy and the spirit of the Under
taking means that you should :
Be certain that your lending personnel know their responsibilities.
Assist your area of responsibility in ensuring that calling officer
programs include efforts to develop minority business loans.
.
Encourage development of management assistance teams that would be
available to assist minority businesses and community based organizations
in such areas as loan packaging , market analysis and financially related
areas .
FUNB 1500
96
Distribution
Page Two
December 18, 1986
When opportunities arise , encourage bank officers to be available
to minority business groups , community based organizations and
similar groups to discuss the criteria and requirements for obtaining
bank credit .
CRA is consistent with our Purpose Statement of Community Service and
our continuing commitment to provide Quality Customer Service. Attitude
is just as important as any element of our policy.
Distribution :
Group Executives
Regional Executives
City Executives
Commercial Banking Managers
Consumer Banking Managers
Group Consumer Banking Directors
Group Credit Administrators
CC :
T. V. Adams
Marion Cowell
Barbara Massa
Bill McDuffie
John Morrison
Mal Murray
Bill Randle
Tom Ridenhour
Tom Rideout
Al Sale
Lenny Springs
Ann Thomas
Steve Woody
97
Commercial Loans
Section
Minority Business Loans
Subject
Policy
Summary :
First Union National Bank is committed to assisting minority
businesses be viable, profitable and valuable members of our
various communities .
This commitment is best demonstrated
by aggressive and innovative support of the credit and
management assistance needs of minority businesses .
1.
Background
Since 1973, First Union has had in place a written Minority
Loan Policy . As the result of continuing changes in the
Bank and the communities we serve , it is appropriate that
this policy be revised and expanded to comply with the
Bank's commitment to serve the convenience and needs
of the entire community without regard for race , creed ,
sex , national origin or economic status of the customer .
Il .
Minority Business Defined
The term " Minority Business" refers to those businesses
owned by Native Americans , Blacks , Orientals , Hispanics
and low and moderate income individuals .
111 .
Loan Approvals
All minority business loan requests should receive the fullest
consideration . A loan officer may approve a minority business
loan application within the officer's designated lending limit .
Requests in excess of the officer's lending limit would need
to be approved in accordance with regular approval policies.
IV .
Loan Declines
If it is the decision of the loan officer to decline a minority
business request , then the officer must consult with and
obtain written concurrence with the decision to decline
from a lending officer of higher authority .
V.
Communication With the Applicant
In those cases when a loan is declined , it is the responsibility
of the lending officer to fully explain to the applicant the
reasons for the decline . If possible, the applicant should also
be shown those factors, which , if improved , would enhance
the application .
VI .
Greater Than Usual Risk
Historic experience has shown that regardless of ownership ,
loans to small and new businesses have a higher - than -average
degree of risk . Within credit policy and prudent lending
practices , the loan officer is encouraged to take an innovative
approach to these credits in order to develop a loan structure
where the risk is acceptable . This should include a plan for
proper account servicing .
98
VII .
Assistance to Minority Business
VIII . Each city office will designate or have access to at least one
99
30640
FIRST UNION CORPORATION
SOUTH CAROLINA CRA UNDERTAKING
In response to expressed concerns of certain community
groups , First Union renews its dedication and commitment to the
communities in which it does business and to the Community
Reinvestment Act . First Union has a long and proud tradition of
active leadership in the communities and states in which its
offices are located .
As First Union expands into South
Carolina , it believes it is important to carry forward this
tradition and to that end makes the following statement :
1 .
First Union , through its subsidiary bank , will conduct
community needs assessment studies in certain
metropolitan areas of South Carolina where it conducts
its banking operations ou into which it expands in
South Carolina , seeking to determine banking product
and credit neccs oi low and overate income groups and
These studies will be
minorities within these areas .
-conducted by First Union or by third party consultants
under contract to 1:31 inion .
The order of priority
for these studies will be determined by Firsi Union ang
the studies will include input izom community based
organizations , community developmeni organizations and
other interested or concerne parties . The studies
will commence within our enths of the effectile cate
oi dirsi Unior's acquisition of Souther? Bancorporation
( the " Effeciive Date " ) and will be completed within û
reasonable period of time thereafter .
2 .
First Union , through its subsidiary baak , will use its
best efforts to inform low and moderate income groups
and the minority communities of its basic banking ,
lending programs and other services . This effort wili
include innovative advertising and marketing efforts
directed toward 10: and moderate income groups and
minority communities . For instance , the commercial
call program of the South Carolina subsidiary bank will
include minority businesses and community development
agencies and corporations .
First Union will use its
best efforts to employ minority advertising or
marketing firms to assist in implementing these
advertising and marketing efforts with the goal that no
less than 10 %
of the contracts to outside suppliers
used by the subsidiary bank in these efforts be awarded
100
to minority advertising or marketing firms .
( a)
First Union further acknowledges concerns
( b)
First Union agrees to make every reasonable effort
to conduct a loan program which is responsive to
the growing credit needs of the low and moderate
income areas of its South Carolina subsidiary
bank's market areas .
This program is intendes to
provide loans which are targeted for low and
moderate income nousing , small business and
commercial real estate projects . The program will
include , but not be limited to , those portions of
municipalities of South Carolina which have median
household incomes equal to or less than 80 % of the
median household income for the SMSA in which such
municipality is located . The bank will use its
general underwriting criteria , terms and
conditions in this program and will use its best
efforts to be as flexible as possible in applying
such standards .
within the bounds of prudent
lending practices and safe and sound banking
operations , the bank will make reasonable efforts
to qualify loan requests presented to the Bank
pursuant to this program . Elements of a
successful program will include :
( i)
1 to 4 family structures
home improvement loans ,
( ii )
Housing Development loans
N
3 .
-
home mortgages ,
construction
101
and rehabilitation loans and permanent
mortgage financing to be made available to
non - profit and other developers for new
construction and rehabilitation of housing
for low and moderate income and minority
residents in qualifying areas . Every
effort will be made to approve loan
requests under this program only for
developments that do not displace residents
without offering suitable replacement
housing .
( iii )
Small Business loans
for businesses with
under $ 5 million in annual sales in
qualifying areas . Loan categories will
include building construction , building
improvement , machinery / equipment , and
working capital .
The bank will endeavor to make favorable pricing
available on loans under this program .
The bank
may seek other banks to participate in the program
and seek government and alternative resources such
as grants , loan guarantees or interest write downs
in this program .
( c)
First Union recognizes the importance of community
development corporations and such othe :
intermediarý development organizations , such as
the Charlotte , North Carolina , Neighborhood
Housing Services , to the economic development of
South Carolina and will provide both financial
support and technical assistance to such
corporations . Such support may be in conjunction
with other banks or companies , or in cooperation
with non - profit organizations or state and local
agencies . Financial support may be in the form of
investment or contributions by First Union of its
bank subsidiary in South Carolina .
Supplementing the effort will be a minority
enterprises lending policy providing that any
lending officer
loan within his
further proviso
enterprise loan
may approve a minority enterprise
or her lending limit with the
that in order for a minority
request to be turned down the
concurrence of at least two lending officers will
be required . In addition , each city office in
South Carolina will designate or have access to at
least one lending officer to be responsible for
monitoring the availability of minority loan
3
الي
( d)
102
programs to assist the bank or minority
Further , the banks credit training
programs will include information pertaining to
its policy regarding loans to minority businesses
so that appropriate personnel will be aware of the
bank's objectives in this area . Through
affirmative education and information programs
loan officers and other bank officers will be kept
advised of their responsibilities under the
Community Reinvestment Act and fair lending
businesses .
practices laws .
( e)
Management assistance , such as legal advice ,
account services and technical expertise from
private industry is essential to continued
viability of borrowers .
Bank officers will be
encouraged to develop management assistance teams
in their communities to assist minority business
enterprises .
In addition , technical assistance
will be provided by bank personnel to community
development corporations in areas such as loan
packaging , market analysis and financially related
areas .
( 1)
Each city office will have access to a lending
resource person whose principal responsibility is
to assist bank lending officers , customers and
potential customers with such programs as :
( i)
Small business Administration loan programs
and certified development company procräms ;
( ii )
Neighborhood housing Services Programs ;
( iii )
Urban Development Action Grants ;
( iv )
Community Development Block Grant Programs
for housing and economic development ;
( v)
Specialized state and county mortgage
programs ;
( vi )
and
Other minority or government loan programs
available to the bank's customers .
4 .
In an effort to further improve communications between
First Union's subsidiary bank in South Carolina and low
and moderate income groups and minorities , the
subsidiary bank will seek individuals to elect to its
city advisory boards from low and moderate income
groups , minority groups or other community involved
4
103
groups , which are representative of low and moderate
income groups and minority groups . These efforts will
begin within two months of the Effective Date and a
minimum of two such individuals will be elected to the
advisory boards in Greenville , Columbia , Orangeburg .
and Charleston with a goal of accomplishing this within
18 months of the Effective Date . It shall also be the
goal of the subsidiary bank in South Carolina to place
one such individual on each of its other city advisory
boards .
.
5 .
It shall be the policy of the South Carolina subsidiary
bank to have annual reviews of its Community
Reinvestment Act Statement , policies and procedures .
Such annual review shall be an agenda item on each city
advisory board's agenda at least three months before
such statement , policies and procedures are to be
reviewed for annual implementation by the subsidiary
bank's general board of directors and management .
6.
First Union will continue the same commitment towards
charitable giving that it has employed in North
Carolina .
First Union evaluates individual
applications for contributions and makes decisions
regarding them after considering need and potential for
positive impact , financial responsibility and similar
related factors .
an important part of first Union's
commitment to community services is its desire to
assist the needy . and handicapped and to pay particula :
attention to the needs of community oriented and
community based organizations .
7 .
First Union supports the concept of providing basic
banking services on a reduced cost basis , directed
towards low income groups and senior citizens and will
continue its efforts to bring such basic banking
services to market .
8 .
As First Union expands into South Carolina by
acquisition , First Union will engage in an evaluaiion
of the credit and underwriting criteria of the acquired
bank and the credit needs of the community in which the
First Union's evaluation of the
bank is located .
criteria will be based upon its own past experience in
establishing and implementing such criteria , safe and
sound banking practices , and will reflect the input and
experience of the acquired bank , as well as input from
the communities served by the bank through the
community needs assessments performed by First Union .
9.
First Union believes that financial institutions can
5
104
properly and usefully play an important role in
assisting low and moderate income borrowers and
customers through the support of credit counseling and
similar consumer services offered by third parties .
First Union will seek ways to support community based
non - profit counseling services financially and with
volunteers .
10 .
First Union acknowledges the usefulness of open
dialogue and increased understanding produced by
meetings , conferences , seminars and other forms of
group communication .
First Union is interested in
maintaining an open and continuing dialogue with
community groups and others following its expansion
into South Carolina .
To facilitate the communication
process , the bank will provide a publicly disclosed
system by which individuals , community oriented groups
low and moderate income groups and minorities can
communicate their concerns directly to a bank officer
with the responsibility for making these concerns known
at appropriate levels of management within the bank .
11 .
First Union or its South Carolina subsidiary bank will
hold quarterly meetings for one year beginning six
months after the Effective Date with representatives of
the concerned groups to monitor implementation of this
undertaking . If the needs assessments provided for in
Paragraph 1 of this undertaking are not substantially
completed at the expiration of a one year period
beginning six months following the Effective Date , then
the monitoring period will be extended for one
additional quarterly meeting .
Such representatives
will respond to any inquiries from the Federal Reserve
Board , community based organizations or any other
persons or groups regarding first Union CRA compliance
efforts as embodied in this undertaking .
6
105
Annex 1 to Undertaking by First Union
1.
North Carolina Housing Finance Agency /Home Mortgage Loan Program
This program is for improvements in homes 15 to 20 years old
secured by second mortgages . First Union buys an N.C. Housing
Finance Agency Bond , the agency makes loans, processes the
loans and services them .
Loan amounts range from $ 5,000 to
$ 15,000 over three year periods. · The funds are utilized for low to
moderate income families to purchase the homes or improve them .
Various cities in the state can and do participate and reduce
the Interest rates on loans with federal funds .
As of September
1984 approximately 30 loans totaling $ 2.3 million in bonds had
been issued under the Home Mortgage Loan Program . In addition ,
First Union has outstanding with the agency $ 3.8 million for
constructing or renovating multi- family rental housing complexes
20 % of such housing having been allocated to low and moderate
income families .
2.
First Union is involved in several neighborhood housing service
This is a cooperative city -neighbortiood
business group for home improvement lending to low and moderate
income families . One such projeca , Plaza /Midwood in Charlotte
groups in North Carolina .
in which First Union worked with two other banks and committed
$ 3 million to the project .
Loans were below market rates and
were available to first time homeowners .
3.
Approximately 10 years ago First Union joined with 19 other
companies in the Greensboro , North Caroline community and
formed the Greater Greensboro Housing Foundation to develop
low income housing as an alternative to public housing . Firsi
Union also provided some of the capital to the foundation .
First Union's regional executive in the Greensboro area has
served as a director of the foundation since its inception ,
and served as an officer as well for five years . That foundation
has developed more than 3,000 living units in Greensboro
and surrounding areas .
4.
In Winston Salen , North Carolina First Union has committed
seed money and loans to a newly organized non - profit organization
to provide financing and other assistance for low income housing .
.
s
Financing was arranged through Cameron - Brown Company , a
First Union subsidiary , in 1983 for $ 14.6 million tax -exempt
finandng for two apartment complexes being rehabilitated in
Charlotte , North Carolina .
These are the first 100% for income
housing projectsin North Carolina Insured by the Federal Housing
Administration ( FHA ) that were not federally subsidized . First
Unfon approached the City of Charlotte which was very interested
In finding a way to save Double Oaks Apartments and Tryon Hills
Apartments and still keep rents relatively low . The Chariotic City
Council acted as redevelopment commission and issued tax - exempt
bonds based on 9.58 morigage rate for Double Oaks and a 9.258
rate for Tryon Hills . The term of the mortgages is 40 years .
106
Double Oaks is a 570 unit complex . The mortgage of $ 9.68
million is insured under FHA Section 221 ( d ) ( 4) of the National
Housing Act and is scheduled for completion in 1986. Tryon
Hills is a 257 unit complex .
The mortgage of $ 4.9 million is
also FHA insured and the complex was completed in 1984 .
6.
7.
First Union has provided urban development loans to 22 cities
in North Carolina, totaling $ 23 million .
First Union has participated in 13 Farmers Hor ... Administration
apartment complexes , totaling $ 1.7 million .
8.
Outstanding industrial revenue bond financing within the State
of North Carolina originated within the last two years, totaled
$ 66.7 million .
9.
These foregoing are but a very few examples of First Union's
efforts in community support in the lending areas it services ,
107
UNDERTAKING
In response to expressed concerns of certain community groups ,
First Union renews its dedication and commitment to the communities in
which it does business and to the Community Reir
2013 Act .
First
Union has a long and proud tradition of active leadership in the communities
and state in which its offices are located .
As First Union expands
into Florida , it believes it is important to carry forward this tradition
and to that end makes the following statement :
1.
First Union , through its subsidiary bank , will conduct
community needs assessment studies in certain
metropolitan areas of Florida where it conducts its
banking operations or into which it expands in Florida ,
seeking to determine banking product and credit needs
of low and moderate income groups and minorities within
these areas .
These studies will be conducted by First
Union or by third party consultants under contract to
First Union .
The order of priority for these studies
will be determined by First Union and the studies will
include input from community based organizations ,
community development organizations and other interested
or concerned parties .
The studies will commence within four
months of the effective date of First Union's acquisition of
Atlantic Bancorporation ( the " Effective Date " ) and will be completed
within a reasonable period of time thereafter .
areas for needs studies are the Tampa
-
Targeted
St. Petersburg area ,
108
the Orlando area , the Daytona Beach area and Broward
and Northern Dade Counties .
2.
First Union , through its subsidiary bank , will use its
best efforts to inform low and moderate income groups
and the minority communities of its basic banking ,
lending programs and other services .
This effort will
include innovative advertising and marketing efforts
directed toward low and moderate income groups and
minority communities .
For instance , the commercial
call program of the Florida subsidiary bank will include
minority businesses and community development agencies
and corporations .
First Union will use its best efforts
to employ minority advertising or marketing firms to
assist in implementing these advertising and marketing
efforts with the goal that no less than 10% of
the contracts to outside suppliers used by the subsidiary
bank in these efforts be awarded to minority advertising
or marketing firms .
3
3.
( a)
First Union further acknowledges concerns expressed
with respect to the need for innovative lending
programs for minority business enterprises , home
mortgage lending and neighborhood and residential
rehabilitation lending .
First Union has long supported
such programs in North Carolina and pledges to provide
support for such programs itself or through its
109
subsidiary bank in Florida .
The projects listed
on Annex 1 are examples of the types of programs
First Union has supported with leadership , volunteer
commitment and funding in partnership with community
development corporations, state and local development
agencies and other representative groups and agencies .
This type of community support is indicative of First
Union's commitment to its communities and with which
it has a long history in the State
North Carolina
First Union will seek opportunities in its market area
in Florida to provide similar community support .
( b)
First Union agrees to make every reasonable effort to
conduct a loan program which is responsive to the
growing credit needs of the low and moderate income
areas of its Florida subsidiary bank's market areas .
This program is intended to provide loans which are
targeted for low and moderate income housing , small
business and commercial real estate projects.
The program
will be active within those portions of municipalities of
Florida which have median household incomes equal
to or less than 80% of the median household income
for the SMSA in which such municipality is located .
The bank will use its general underwriting criteria ,
terms and conditions in this program and will use
its best efforts to be as flexible as possible in applying
-3
110
such standards . Within the bounds of prudent lending
practices and safe and sound banking operations, the
bank will make reasonable efforts to c : ualify loan requests
presented to the Bank pursuant to this program .
Elements of a successful program will include :
( i)
home mortgages ,
1 to 4 family structures
home improvement loans ,
( ii )
Housing Development loans
construction
and rehabilitation loans and permanent mortgage
financing to be made available to non - profit
and other developers for new construction and
rehabilitation of housing for low and moderate
income and minority residents in qualifying areas .
Every effort will be made to approve loan requests
under this program only for developments that do
not displace residents without offering suitable
replacement housing .
( iii )
Small Business loans
For businesses with under
$ 5 million in annual sales in qualifying areas .
Loan categories will include building construction ,
building improvement , machinery / equipment, and
working capital .
The bank will endeavor to make favorable pricing available
on loans under this program .
The bank may seek other banks
to participate in the program and seek government and
alternative resources such as grants , loan guarantees
or interest write downs in this program .
-4
111
( c)
First Union recognizes the importance of community
development corporations to the economic development
of Florid
and will provide both financial support and
technical assistance to such corporations. Such support
may be in conjunction with other banks or companies ,
or in cooperation with non -profit organizations or state
and local agencies . Financial support may be in the
form of investment or contributions by First Union
or its bank subsidiary in Florida .
( d)
Supplementing the effort will be a minority enterprises
lending policy providing that any lending officer may
approve a minority enterprise loan within his or her
lending limit with the further proviso that in order for
a minority enterprise loan request to be turned down
the concurrence of at least two lending officers will be
required .
In addition , each city office in Florida will
designate at least one lending officer to be responsible
for monitoring the availability of minority loan programs
to assist the bank or minority businesses .
Further , the
banks credit training programs will include information pertaining
to its policy regarding loans to minority businesses so
that appropriate personnel will be aware of the bank's
objectives in this area .
Through affirmative education and
information programs loan officers and other bank officers
will be kept advised of their responsibilities under the
Community Reinvestment Act and fair lending practices
laws .
-5
112
( e)
Management assistance , such as legal advice , account
services and technical expertise from private industry
is essential to continued viability of borrowers .
Bank
officers will be encouraged to develop management
assistance teams in their communities to assist minority
business enterprises .
In addition , technical assistance
will be provided by bank personnel to community development
corporations in areas such as loan packaging , market
analysis and financially related areas .
( f)
Each city office will have access to a lending resource
person whose principal responsibility is to assist bank
lending officers , customers and potential customers
with such programs as :
( i)
Small Business Administration loan programs and
certified development company programs ;
( ii )
Neighborhood Housing Services Programs;
( iii ) Urban Development Action Grants ;
( iv ) Community Development Block Grant Programs
for housing and economic development ;
( v)
Specialized state and county mortgage programs; and
( vi )
Other minority or government loan programs
available to the bank's customers .
-6
113
4.
In an effort to further improve communications between First
Union's subsidiary bank in Florida and low and moderate
income groups and minorities, tie subsidiary bank will seek
individuals to elect to its city advisory !wards from low and
moderate income groups , minority groups or other community
involved groups, which are re; 'esentative o ' low and moderaie
income groups and mino.ity groups .
These efforts will begin
within four months of the Effective Date and at least one such
individual will be elected to each advisory board with a goal
of accomplishing this within 18 months of the Effective Date .
5.
It will be the policy for annual reviews of the Florida
subsidiary bank's Community Reinvestment Act Statements
to be an agenda item on each city advisory board agenda at
least three months before such statements are reviewed for
annual re- implementation by the subsidiary bank's general
board of directors and management .
6.
First Union will continue the same commitment towards
charitable giving that it has employed in North Carolina .
First Union evaluates individual applications for contributions
and makes decisions regarding them after considering need
and potential for positive impact , financial responsibility and
similar related factors . An important part of First Union's
commitment to community services is a desire to assist the
needy and handicapped , paying particular attention to the
needs of community oriented and community based organizations .
-7
114
7.
First Union supports the concept of providing " life - line " or
basic banking services on a reduced cost basis , directed
towards low income groups and senior citizens and will
continue its efforts to bring " life - line" or basic banking services
to market .
8.
As First Union expands into Florida by acquisition ,
First Union will engage in an evaluation of the credit and
underwriting criteria of the acquired bank and the
credit needs of the community in which the bank is located .
First Union's evaluation of the criteria will be based upon its
own past experience in establishing and implementing such
criteria , safe and sound banking practices and will reflect
the input and experience of the acquired bank as well as
input from the communities served by the bank through
the community needs assessments performed by First
Union .
First Union believes that financial institutions can properly
and usefully play an important role in assisting low and moderate
income borrowers and customers through the support of credit
counseling and similar consumer services offered by third
parties .
First Union will seek ways to support community based
non- profit counseling services financially and with volunteers .
10.
First Union acknowledges the usefulness of open dialogue
and increased understanding produced by meetings ,
-8
115
conferences, seminars and other forms of group communication .
First Union is interested in maintaining an open and continuing
dialogue with community groups and others following its
To facilitate the communication process ,
expansion into Florida .
the bank will provide a publicly disclosed system by which
individuals , community oriented groups , low and moderate
income groups and minorities can communicate their concerns
directly to a bank officer with the responsibility for making
these concerns known at appropriate levels of management
within the bank .
11 .
First Union or its Florida subsidiary bank will hold quarterly
meetings for one year after the Effective Date with representatives
of the concerned groups to monitor implementation of this undertaking .
If the needs assessments provided for in Paragraph 1 of this
undertaking are not substantially completed at the expiration
of one year following the Effective Date then the monitoring
period will be extended for one additional quarterly meeting .
Such representatives will assist First Union in presenting its
compliance efforts to other concerned groups or parties should
further questions be expressed with respect to First Union's
or its subsidiary bank's CRA compliance in Florida .
-g
116
Annex 1 to Undertaking by First Union
1.
North Carolina Housing Finance Agency !Home Mortgage Loan Program
This program is for improvements in huines 15 to 20 years old
secured by second mortgages . First Union buys an N.C. Housing
Finance Agency Bond , the agency makes loans , processes the
loans and services them .
Loan an: ounts range from $ 5,000 to
$ 15,000 over three year periods . The funds are utilized for Ic
moderate incrime families to purcha : 2 thu homes or improve them .
Various cities in the state can and do participate and recuce
.
the interest rates on loans with federal funds .
to
As of September
1984 approximately 30 loans totaling $ 2.3 million in bonds had
been issued under the Home Mortgage Lean Program . In addition ,
First Union has outstanding with the agency $ 3.8 million for
constructing or renovating multi- family rental housing complexes
20 % of such housing having been allocated to low and moderate
income families .
2.
First Union is involved in several neighborhood housing service
groups in North Carolina .
This is a cooperative city -neighborhood
business group for home improvement lending to low and moderate
income families .
One such project , Plaza / Midwood in Charlotte
in which First Union worked with two other banks and committed
$ 3 million to the project .
Loans were below market rates and
were available to first time homeowners .
3.
Approximately 10 years ago First Union joined with 19 other
companies in the Greensboro , North Carolina community and
formed the Greater Greensboro Housing Foundation to develop
low income housing as an alternative to public housing . First
Union also provided some of the capital to the foundation .
First Union's regional executive in the Greensboro area has
served as a director of the foundation since its inception ,
and served as an officer as well for five years .
That foundation
has developed more than 3,000 living units in Greensboro
and surrounding areas .
4.
5.
In Winston- Salem , North Carolina First Union has committed
seed money and loans to a newly organized non -profit organization
to provide financing and other assistance for low income housing .
Financing was arranged through Cameron-Brown Company , a
First Union subsidiary , in 1983 for $ 14.6 million tax - exempt
financing for two apartment complexes being rehabilitated in
Charlotte , North Carolina . These are the first 100% low income
housing projects in North Carolina insured by the Federal Housing
Administration ( FHA ) that were not federally subsidized . First
Union approached the City of Charlotte which was very interested
in finding a way to save Double Oaks Apartments and Tryon Hills
Apartments and still keep rents relatively low . The Charlotte City
Council acted as redevelopment commission and issued tax - exempt
bonds based on 9.5 % mortgage rate for Double Oaks and a 9.25 %
rate for Tryon Hills . The term of the mortgages is 40 years .
117
Double Oaks is a 570 unit complex .
The mortgage of $ 9.68
million is insured under FHA Section 221 ( d ) ( 4 ) of ihre National
Housing Act and is scheduled for completion in 1986. Tryon
Hills is a 257 unit complex . The mortgage of $ 4.9 million is
also FHA insured and the complex was completed in 1984 .
.
6
First Union has provided urban development loans to 22 citius
in North Carolina, totaling $ 23 million .
7.
First Union has participui.d in 13 Farmers Home Administration
apartment complexes , totaling $ 1.7 million .
8.
Outstanding industrial revenue bond financing within the State
of North Carolina originated within the last two years , totaled
$ 66.7 million .
.
9
These foregoing are but a very few examples of First Union's
efforts in community support in the lending areas it services .
118
ATLANTA MORTGAGE CONSORTIUM
Contact :
For Immediate Release :
Jim Mynatt
June 17 , 1988
588-8737
MORTGAGE CONSORTIUM READY FOR BUSINESS ;
TWO PROJECTS , ADVISORY BOARD ANNOUNCED
ATLANTA , GA .
The Atlanta Mortgage Consortium ( AMC) will be ready to
receive and process mortgage loan applications starting Monday , June 20 at 55
locations , 23 with Saturday hours . Formed by nine Atlanta financial institu
tions , which together have committed a mortgage loan pool of $ 20 million , AMC
has completed its start up preparations and the training of personnel to
handle applications .
subdivision .
119
ATLANTA MORTGAGE CONSORTIUM
2
June 17 , 1988
" These two programs represent a major commitment by the Consortium to
apply its $ 20 million in resources to upgrade deteriorating housing in some
areas of the city , as well as to develop new housing to make home ownership
more affordable for more of our citizens, " said James G. Mynatt , spokesman
for the Consortium .
120
ATLANTA MORTGAGE CONSORTIUM
- 3 -
June 17 , 1988
of Atlanta Department of Community Development ; Fulton County Commissioner
Michael Hightower ; Jonathon Jones , Executive Director , S.E. Reinvestment
Ventures , Inc .; Noel Kahil , President , Gibraltar Land Inc .; Robert D. Lupton ,
Executive Director , Family Consultation Services , Inc .; Craig Taylor , South
Atlanta Land Trust , and two representatives from DeKalb County to be named .
121
ATLANTA MORTGAGE CONSORTIUM
Locations Accepting AMC Mortgage Loan Applications
* indicates Saturday hours
BANK SOUTH , N.A.
Main Office , 55 Marietta Street
Contact : Carey Russell , 529-4821
* East Point Office , 1733 Washington Avenue
* West End Office , 638 Evans Street , S.W.
* Decatur Office , 163 Clairmont Road
East Atlanta Office , 411 Flat Shoals Avenue , S.E.
Contact : Diane Robinson , 584-6705
THE CITIZENS &
SOUTHERN NATIONAL BANK
* South DeKalb Office , 2850 Candler Road
East Point Office , 2818 East Point Street
Contact : Charles Sweat , 763-0381
* Cascade Heights Office , 2358 Cascade Road , S.W.
CITIZENS TRUST BANK
Main Office , 75 Piedmont Avenue
Contact : Alan Bouknight or Joan Sarden , 653-2708
FIRST AMERICAN BANK OF GEORGIA
West End Office , 874 Gordon Street
Contact : Wyatt Davis or Stephanie Willians , 752-8400
* Old National Office , 4803 old National Highway
Five Points Office , 34 Peachtree Street , N.W.
Contact : Elaine Hamby , 584-1500
* Wesley Chapel Office , 2555 Wesley Chapel Road
Moreland Office , 1401 Moreland Avenue , S.E.
Contact : Joe Dunaway , 624–7500
122
- 2 -
THE FIRST NATIONAL BANK OF ATLANTA
* Campbellton Plaza Office . 2098 Campbellton Road , S.W.
* Greenrbiar Office , 2841 Greenbriar Parkway , S.W.
* South DeKalb Office , 2782 Candler Road
* Stewart - Lakewood Office , 2891 Lakewood Avenue , S.W.
* West End Office , 612 Lee Street , S.W.
Buckhead Office , 3040 Peachtree Road , N.W.
Contact : Sharon Schafer , 841-7941
Gwinnett Place Office , 2170 Pleasant Hill Road , Duluth
Contact : Jane Ferguson , 476-0472
Lawrenceville Office , 279 W. Crogan Street
Contact : Mary Luweli , 963-8111
Main Office , 2 Peachtree Street , N.W.
Contact : Gladiola Worthem , 332-6355
Mansell Road Office , 10825 Alpharetta Highway , Roswell
Contact : Billie Adsher , 642-8384
Peachtree Corners Office , 6925 Jimmy Carter Blvd. , Norcross
Contact : Jane Ferguson , 368-1523
Riverdale Office , 591 Valley Hill Road , Riverdale
Contact : William Kramer , 994-0380
FIRST UNION NATIONAL BANK OF GEORGIA
* East Point Office , 2791 East Point Street , S.W.
Airport Office , 1001 Virginia Avenue , Hapeville
Contact : Brend
Darnell , 766-6200
* Hapeville Office , 590 s . Central Avenue
Chapel Square Office , 4825 Flat Shoals Road , Decatur
Contact : Dave Neal , 987-1222
old National Office , 5120 old National Highway , College Park
Contact : Jo Anderson , 761-8031
123
- 3 -
FULTON FEDERAL SAVINGS AND LOAN ASSOCIATION
Main Office , 21 Edgewood Avenue
Contact : Henry Armstrong , 586-7073
East Point Office , 2860 East Point Street
Contact : Ronnie Burch , 763-4910
* Old National Office , 5440 Old National Highway , College Park
* Fayetteville Office , 685 North Jeff Davis Drive
GEORGIA FEDERAL BANK
* College Park Office , 3581 Main Street
Five Points Office , 20 Marietta Street , N.W.
Conact : Nancy Hill , 588-2660
* Greenbriar Office , 3080 Campbellton Road , S.W.
Midtown Office , 1124 Peachtree Street , N.E.
Contact : Tim Fitzgerald , 898-1710
Peachtree Center Office , 241 Peachtree Street , N.W.
Contact : Angie Woodward , 588-2488
* South DeKalb Office , 2851 Candler Road , Decatur
* Stewart - Lakewood Office , 2085 Stewart Avenue
West End Office , 921 Gordon Street
Contact : Clyde Mitchell , 752-1800
TRUST COMPANY BANK
Chattahoochee Office , 1221 Chattahoochee Avenue , N.W.
Contact : Jean Wilson , 350-5101
.
* Forest Park Office , 3900 Jonesboro Road , S.E.
Executive Park Office , 1 Executive Park Drive , N.E.
Contact : Diane Baker , 728-1212
Fulton Industrial Office , 711 Fulton Industrial Blvd. , N.W.
Contact : Margie Elliott , 699-3991
Greenbriar Office , 3170 Greenbriar Parkway , S.W.
Contact : Cynthia Hall , 344-8401
o
ga
124
- 4
TRUST COMPANY BANK ( Continued )
Lakewood Office , 1700 Lakewood Avenue , S.E.
Contact : Leon Norton , 624-2982
Main Office , I Park Place , N.E.
Contact : Martha Simmons , 588-8286
Mortgage Loan Division , 5008 Buford Highway , Chamblee
Contact : Sharon Clark or Charles Williams , 454-3566
Panola Road Office , 2843 Panola Road , Lithonia
Contact : Dan Bailey , 593-5451
* South DeKalb Office , 2731 Candler Road , Decatur
* South Fulton Office , 5150 Old National Highway , College Park
West End Office , 670 Stweart Avenue , s.w.
Contact : Linda McAdoo , 752-1991
125
The CHAIRMAN . Thank you very much, Governor Johnson.
STATEMENT OF ROGER F. MARTIN , BOARD MEMBER, FEDERAL
SPECIALIZED EXAMINERS
We definitely support, and I personally support, the idea of spe
cialized examiners . We are currently evaluating that approach . We
are concerned about — or actually are opposed to the comparative
rating system . This provision would require a comparison of simi
larly sized institutions serving very different communities. Need
126
less to say , a $ 100 million asset institution in McLean , VA is differ
ent than an Oshkosh , WI -- our home State, Senator — thrift.
>
>
>
INTRODUCTION
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Subtitle
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puts
months
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staff
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.
134
135
The CHAIRMAN . Thank you, Mr. Martin .
Mr. Martin , don't you come originally from Columbus, WI ?
Mr. MARTIN . Cincinnati.
STATEMENT OF L. WILLIAM SEIDMAN, CHAIRMAN , FEDERAL
MIRAGE CONSUMERISM
First, we believe a good part of the H.R. 5094 really represents
mirage consumerism , and that is defined as an effort to correct a
problem that doesn't exist. This is so at least as to almost all the
banks for which we are the principal regulator.
136
In the Community Reinvestment Act area, our experience and
record shows that banks have complied , to a very significant
extent, with existing law . The small number of consumer com
plaints and protests we have received and few public comments we
have found in the banks' CRA public files support this finding.
137
Our third point, Mr. Chairman , is that many of the title provi
sions would place banks in an unfair position vis - a -vis financial
service competitors by requiring banks to incur costs not required
by their competitors.
Mr.
morning
.Good
Committee
the
of
members
and
Chairman
Iam
pleased
to
TESTIMONY
OF
views
offer
Deposit
of
Federal
Corporation
Insurance
the
on
various
provisions
-related
consumer
IV
Title
in
Institutions
Depository
the
of
Act
TIV
,Hitle
(1969
.R.
").5094
SEIDMAN
WILLIAM
L.
Introduction
several
amend
would
IV
Title
consumer
banking
existing
-related
and
laws
ON
Samend
anTitle
.establish
ones
new
of
pecifically
umber
would
,the
Reinvestment
Community
the
substantially
(CRA
1977
");rAct
of
each
equire
to
agencies
regulatory
bank
federal
the
aseparate
establish
division
DH.R.
OF
IV
,TITLE
5094
EPOSITORY
1988
ACT
INSTITUTIONS
applicable
with
compliance
nforce
protection
;consumer
laws
and
examine
offer
to
banks
require
prescribed
for
account
an
check
and
checking
-cashing
requirements
,and
services
notice
impose
national
of
closing
the
on
bank
THE
BEFORE
branches
.
includes
also
IV
Title
previously
bills
two
the
by
passed
of
House
AFFAIRS
,HOUSING
BANKING
ON
COMMITTEE
URBAN
AND
banks
on
requirements
additional
imposes
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other
and
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143
provide
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144
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146
Attachments
147
A
Aboardix
a
UNIFORM INTE
ENCY
Rating ( 1) – The institutions in this group have a strong
COMMUNITY REINVESTMENT ACT ( CRA)
ASSESSMENT RATING SYSTEM
record of meeting community credit needs. Born tne
board of directors and management take an active pan
in the process and demonstrate an affirmative commit
ment to the community. Institutions receiving this rating
normally rank high in all performance categories. Such
Introduction
The purpose of the rating system is to provide a uniform
means for regulatory agencies to identity quickly those
institutions which require varying degrees of en.
couragement in helping to meet community credit
needs. This provides a comprehensive and unitorm
institutions have a commendable record and need no
turther encouragement.
Rating ( 2 ) - Institutions in this group have a satisfac .
tory record of helping to meet comriunity credit needs
Institutions receiving this rating normally are ranked in
the satisfactory levels of the pertormance categories
Institutions in this category may require some en .
couragement to help meet community credit needs.
Rating ( 3 ) - Institutions in this group have a less than
satisfactory record of helping to meet community credit
needs. The board of directors and management have
not placed strong emphasis on the credit needs of the
community. Institutions receiving this rating have mixed
rankings surrounding the mid -range levels of the per .
formance categories. Such institutions require en .
couragement to help most community credit needs.
system for evaluating theperformance of federally regu .
lated financial institutions examined under the various
assessmeni factors of the Community Reinvestment
Act and facilitates more unitorm and objective CRA
ratings.
The rating system ranks financial institutions on a scale
from 1 through 5 with a " 5" representing the lowest level
of portormance under the Act and, therefore, the high
est degree of concern . Lovel 3 reflects portormance
which is less than satistactory.
This system furthor omploys fivo “ performance cat.
Rating ( 1) - Institutions in this group have an un.
egories' or components from which the overall com
satisfactory record of helping to meet community credit
noods. The board of directors and management give
posite CRA rating is derived . The portormanco cat.
ogonios represent a grouping of the various assessment
factors contained in the implementing regulation for the
inadequato consideration to the credit needs of the
institution's community. Institutions receiving this rating
generally rank below satistactory in the majority of the
performanco categorios. Such institutions require
Act. Each portormance category is evaluated on a
scale of 1 to 5 with a '5' representing the lowest level
and thorofore the worst portormance. As explained
lator, each portormance category includes a narrative
strong encouragement to help meet community credit
noods.
description for oach rating lovel.
Institutions in this group have a sub
Rating ( 5 )
stantally inadoquate record of helping to meet commu
noods.
The board of directors and manage
credit
nity
mont appear to give little consideration to the credit
needs ofthe institution's community. Institutions receiv .
Overview
Each financial institution is assigned a composito CRA
rating that is based upon the institution's portormance in
mooting various community credit noods.An examiner
ing this rating generally rank in the lowest levels of the
portormanco Catogorios. Such institutions require the
strongest encouragement to be responsive to commu.
begins to ovaluate the institution's record in mooting
financial
community credit noods by first reviewing its
local acon
condition and size, logal impodimonts, and
nity credit noods.
omic conditions, including the competitive environment
in which it operates. The type of community in which the
Portormance Categories
For purposes of evaluating an institution's CRA per.
institution is located will also have a significant bearing
on how the institution fulfills its obligations to the com
formance the various assessment factors and criteria
aro grouped into the following " portormance cat
munity. Community credit noods will ohon ditter with the
specific characteristics of onch local community, ro
sulting in a variety of ways an institution may most those
noods. To maintain a balanced perspective examinars
must carotully consider intormation provided by both
the institution and the community .
egories " :
I. Community Credit Noods and Merketing
Composite Rating
The pertormance categories are individually assigned a
numeric rating . In assigning the overall composito CRA
rating, the performance categories will be weighod and
ovaluated according to howwell the institution moats
the doscnptive characteristics listed below .
Appendix A
5
Raong Systems ( 12-86 )
148
А
Adoondiz
types and amounts of credit extended to the com .
reach all segments of its community. Community
munity and the degree to which those extensions
segments should include low• and moderate .
are , in fact , helping to meet the community s needs.
Included in this category are assessment factors ( i )
income residents . small businesses and . where
applicable. owners of small farms . Management
has also established working relationships with real
estate brokers and others who serve low . and
moderate -income areas and who may provide as .
sistance for small or minority businesses. There is
evidence that senior management is awa'e c
community concerns and activities.
The institution has undertaken
Rating Level 2
activities to determine its community's credit needs
As a result of these activities, the institution is gen .
erally aware of the credit needs within its commu.
nity, including low , and moderate - income areas .
The institution has initiated a dialogue with commu .
nity representatives such as local government .
noighborhood , religious, and minority organ .
izations, or small business and small farm organ
izations. The institution has undertaken marketing
and credit related programs but the programs are
not ongoing or comprehensive. Senior manage
mont demonstrates an awareness of community
concerns and activities.
Rating Lovol 3 - The institution's activities to de
tormine community credit noods are limited. The
institution's employoos may serve as volunteers on
Portormance Category Ratings
1. Community Credit Needs and Marketing
community organization boards and committees.
Howover, the institution has notestablished a syste
matic method to determine how or ii its employees
volunteerism assists the institution in meeting its
CRA goals. The institution's advertising may be
principally deposit oriented. In addition , the insti
tution generally has made no ottons to market its
services on an equal basis to all segments of its
community. Marketing and credit related programs
do not include a mechanism for roaching low . End
modorate-incomo areas within the dolinoated
.
community . The institution's marketing effort does
not adequately focus on marketing the types of
credit for which the institution has identified a neod
( or a neod is otherwise apparent) . There may also
be somo concern about the community delineation .
Rating Lovel 4 – The institution's efforts to deter.
mino community credit noods are very limited and
fail to address major segments of its community .
Management has not established a dialogue with
organizations roprosentative of the community, in.
cluding any which represent low- and moderato
income or minortty neighborhoods within the do
lineatod community. The institution's marketing and
credit related programs are limited or poorly con
ceived. There may also be some concom about the
community dolineation. Senior managemont is un
awaro of special noods of low- and moderate
income residents, small business and small farms.
Rating Lovel5 - Tho institution has not undertaken
any moaningtui offorts to determine community
Appendur A
Radng Systems ( 12-46 )
149
A
Appercix
credit needs. Management has limited knowledge
regarding the community's demographic charac
teristics. The institution's marketing and credit re
lated programs are either non -existent or have re
peatedly excluded low. and moderate - income ar.
eas within the delineated community. There may
also be some concern about the community de
moderate -income areas. Its participation in private .
as well as government insured. guaranteed or sub
sidy loan programs is either pretunctory or none .
xistent, under circumstances where the need for
such loans has been idenufied and the lender can
articulate no objective supportable reason for its iow
level of participation .
Rating Level 5 The institution is unwilling to adapt
its credit offerings to serve demonstrated unmet
credit needs in its community . Daticularly for hous .
ing . small business or small farm credit. This raling
would be particularly appropriate where the lende ! s
failure to meet these needs was cited in a previous
Appendur A
Rading Systems ( 12-46 )
150
A
Apoondix
Rating Level 3 – The geographic distribution of the
-
Rating Level 3
The institution is in less than
institution's credit extensions, applications and den .
satisfactory compliance with antidiscrimination and
ials may suggest unreasonable lending patterns.
Management has not antempted to review its lend .
ing policies and procedures or to analyze the insti .
tution's lending patterns within its community . Tlie
institution s reco's of opening and closing offices
ar d its provision for services at its offices may
indicate a disparity of treatmeni between contain
areas within ! s community. Such a disparity is iso
other credit laws .
Rating Level 4
lated and not an overall intentional pattern or prac.
tice. Management has plans to undertake immedi
ate steps to restore reasonably equal service to any
attected areas .
The geographic distribution of
Rating Level 4
credit extensions, applications and denials reveal
unreasonable lending patterns. particularly in low
and moderate - income neighborhoods or areas of
racial/ethnic concentration . The geographic dis.
tribution of applications may indicate a possible
pattern or practice of discouraging or illegally pre
screening applications. The institution's record of
opening and closing offices and the provisions of
services at its offices may suggest a pattern of
disparate treatment of minority or low . and
moderate - income neighborhoods . The record
might portray an institution that has systematically
sought to close or curtail services at offices serving
minority or less affluent neighborhoods while open
ing new offices in developing, majority or upper.
income areas .
The geographic distribution of
Rating Level 5
credit extensions, applications and denials rovoals
-
extensive , systematic, and unreasonable londing
patterns. The institution has adopted loan policios
and procedures. Such as unjustifiably high minimum
mortgage amounts or down payments or restric.
tions based on the age of property , which have or
can reasonably be expected to have a significantly
adverso impact on loan availability in low- and
moderato -income or minority neighborhoods.The
institution's record of opening and closing offices
and the provision of services at its offices suggest a
continuing pattern of disparato treatment of minority
or low. and moderato -income neighborhoods.
Where this was proviously cited , management has
Appendix A
Rating Systems ( 12-46 )
151
A
Appendix
covered previously, to help meet community credit
Rating Level 5
noods. Management may be unaware of the CRA
regulations ' encouragement of institution in.
volvement in community developmentir @ .
development programs.
Appender a
Rating Systems ( 12-46 )
Council
Eumination
Institutions
Financial
Federal
-2
adaptation
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While
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competitive
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2000
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1983
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152
financial
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153
offering
the
promote
baste
cfinancial
,of
services
onsistent
safe
with
and
154
The CHAIRMAN . Thank you very much, Chairman Seidman .
DELAY IN ESTABLISHING SECURITIES SUBSIDIARIES
According to an ABA Commission analysis, the House bill would
delay the ability of bank holding companies from establishing secu
rities subsidiaries by as much as 2 years. This stems from the rule
making process required for adopting new CRA rating standards
and from the subsequent exams.
ess .
There is a 45 -day comment period that only begins after exami
nations have taken place and after the applicant has had to under
take newspaper advertising in various local communities. In some
cases this may mean a prolonged period before the comment period
could even start. Then there is the 45 -day public comment period,
and then beyond that there is the possibility of extensions on com
ments. Once that process has been finished and the application has
been reviewed and decided, there is still a follow -up process for cer
tain cases which could extend easily into a 2 -year period before ev
erything is final.
155
We are sympathetic to the social objectives sought through the various provisions
of title IV . We have serious concerns, however, that those provisions, particularly
when taken in the aggregate, might jeopardize the safe and sound operation of
many smaller banks where the implementation costs of these new provisions could
be quite onerous.
EXEMPTIONS FROM CERTAIN EQUAL CREDIT OPPORTUNITY ACT
>
90-163 0 - 88 - 6
156
rights every time a transaction takes place, especially in the busi
ness creditarea, because of things like trade financing and special
large transactions.
157
As I mentioned in my opening statement, doesn't a rating system
like that sort of guarantee that you get put in the old bell curve?
Some of them you just simplyhave to say are not performing be
cause they are not doing as well as some others; they are still doing
a good job but you may get half of them on the bottom of that bell
curve ?
DECLINE IN NUMBER OF FAMILIES USING THE BANKING SYSTEM
Mr. Johnson , I wonder if that statement coincides with informa
tion available to the Federal Reserve System and, if so, what is the
explanation for that declining percentage of American families
using the banking system ?
158
have constantly resisted the notion of a specific requirement at a
fixed price.
a
159
As I stated in my testimony, I believe our examinations involve looking at both;
that is, both process and performance. However, it is not our policy to require banks
to make particular kindsof loans or specified amounts in a given area in some rela
tionship to the demographic makeup of that area. That, in my opinion , would be a
form of credit allocation, which the Board has long held is properly a legislative
function rather than a function of this or any other agency to take upon itself.
160
As I said , we have not completed the Detroit assessment, and we
would be happy to communicate our findings when we do.
OPPOSITION TO PUBLIC DISCLOSURE OF CRA RATINGS
Mr. Seidman , in your testimony, you oppose public disclosure of
the Community Reinvestment Act ratings because you indicate,
and I quote, " institutions would use the ratings as a Federal en
dorsement in advertising," close quote.
>
161
That seems to me to be a much more equitable way to deal with
the situation and make it possible then to have a seal of approval.
162
I frankly think that safety and soundness in this environment
we're operating should be the overriding criteria in looking at
these provisions.
a
Senator SASSER . Mr. Chairman .
The CHAIRMAN . I beg your pardon.
SAFETY AND SOUNDNESS OF INSTITUTIONS
Mr. CLARKE . To get to your question of what would have the
least impact on the safety and soundness of institutions, that would
163
the disclosure provisions already incorporated in the Senate bill
with respect to home equity lending and truth -in -savings. We prob
ably would also not have any particular objection to requiring that
banks provide some kind of notice of branch closings. We've al
ready encouraged banks to do that voluntarily. But I think it ought
to stop there. That should be a business decision made by the fi
nancial institution itself.
164
think the situation in Milwaukee is about the same and it's likely
to be about the same elsewhere.
1
165
Mr. CLARKE. Mr. Chairman , we are against disclosure, too , let me
explain .
166
that triumvirate - the part charged with the responsibility of as
sessing the extent to which banks are meeting the credit needs of
their community .
STATEMENT OF KENT CARRUTHERS, PRESIDENT, THE CITIZENS
CREDIT UNIONS EXEMPTED
We are dismayed that the Senate bill exempted credit unions
from specific parts of this bill . Community bankers strongly sup
port the technical amendments to the Expedited Funds Availability
Act, although we are adamantly opposed to the provisions in the
House bill that give special treatment to credit union payable
through drafts.
167
utilities which should provide congressionally mandated banking
services at set prices.
SOME SERIOUS DEFICIENCIES
First, it does not establish a true account relationship between
the bank and the customer. An account relationship, even a life
line or basic account, provides the bank and the consumer with the
opportunity to develop a banking relationship.
168
Title IV imposes stringent new burdens on banks and bank hold
ing companies but does not touch the operations of nonbank banks,
securities firms, insurance companies and other companies which
also provide financial services.
Kent
is
name
y
m,Committee
the
of
members
and
Chairman
Mr.
m
,iIaPresident
Clovis
Bank
Citizens
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of
.n
Carruthers
ew
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behalf
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morning
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America
of
Association
Bankers
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the
the
is
IBAA
only
that
association
trade
national
the
represents
exclusively
TESTIMONY
.
banks
community
independent
of
interests
Iappreciate
concerns
serious
present
to
opportunity
the
Title
in
provisions
consumer
various
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ounded
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My
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H.R.5094
of
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over
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M.on
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ank
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CARRUTHERS
KENT
OF
PRESIDENT
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AMERICA
OF
ASSOCIATION
BANKERS
INDEPENDENT
169
ON
-CONSUMER
5094
H.R.
OF
PROVISIONS
PROTECTION
TITLE
IV
.
requirements
f
, irst
Chairman
Mr.
like
Iw
ould
the
on
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support
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bill
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active
very
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THE
BEFORE
,HOUSING
BANKING
ON
COMMITTEE
AFFAIRS
URBAN
AND
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consumers
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to
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would
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receive
to
abank
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?circumstances
S988
THURSDAY
,1
8
EPTEMBER
,
amendments
technical
the
support
strongly
bankers
Community
BUILDING
SENATE
DIRKSEN
538
ROOM
OFFICE
WASHINGTON
,D.C.
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o
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1987
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170
of
to
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than
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soundness
and
safety
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tenets
basic
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Chairman
Mr.
IV
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ank
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a#3)( more
.ttachment
not
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year
this
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While
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CRA
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changes
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,In
Chairman
Mr.
conclusion
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funds
Title
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over
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IV
Title
regulations
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Add
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credit
ossible
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for
powers
enforcement
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with
new
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swamped
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will
banks
and
bill
disclosure
card
regulations
.
deposit
and
banks
the
serve
nature
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ommunity
very
their
By
Their
directly
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success
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communities
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of
needs
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home
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community
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keep
to
you
.
issues
these
consider
172
173
ATTACH MENT # 1
AROMA MAI
THE CITIZENS BANK OF CLOVIS
THE CITIZENS BANK OF CLOVIS
SERVICE CHARGE AND FEE SCHEDULE
REGULAR CHECKING ACCOUNT -PERSONAL.
Average Daily Balance
ECONO CHECKING -PERSONAL
A monthly fee of $ 2.00, for the first 12 checks; 50 € for each additional check written during cycle. No balance requirement.
Availability of funds is determined by origin of deposited item ( s) . Current availability schedule and bank poliey will
govern . See bank for details .
NEGOTIABLE ORDER OF WITHDRAWAL ACCOUNT " NOW ACCOUNT "
Personal ( Non -Business )
Minimum required balance: $ 500.00
$ 500.00 and over
Business
Interest earned on the average daily collected balance, payable on cycle date .
Regardless of balance, a service charge of 1sc per check , 250 each deposit and $ 3.00 each item charged back . If statement
balance falls below $ 3,000.00 at any time during the monthly cycle, preceeding charges plus maintenance fee of $ 10.00 .
MMDA - MONEY MARKET DEPOSIT ACCOUNT
Interest can change every Tuesday, Compounded daily , Interesi earned on the average daily collected balance , payable
on cycle date. Three withdrawals and three dratis allowed per month . Should withdrawals exceed the maximum number ,
the bank may either close account or take away accounts ' transfer and draft capacities. Unlimited transactions at bank .
Should halance fall to below $ 2.500 but above $ .00 , interest will be paid at " NOW ACCOUNT " rate for cycle period.
Below $ 900 at any time during cycle period , account will be charged $ 6.00 maintenance fee plus 20c per check .
SAVINGS ACCOUNT
Interest compounded daily, minimum balance to open is 5100.00 . Interest paid if account carns 40€ or more per month .
$ 1.00 per month charge on accounts with less than $ 100.00 . Two withdrawals per monthly cycle period, withdrawals in
excess of two will be charged $ 1.00 cach .
Dormant Account Status: A demnand deposit account will become dormant after 180 days without customer generated ac
finity. A $ 10.00 charge will he assessed when account goes dormant plus a $ 5.00 per month fee regardless ot balance.
A Time Account ( savings ) becomes dormant afier three years of no customer generated activity . A $ 10.00 charge will be
assessed when account goes dormant plus a $ 1.00 per month lee regardless of balance . All dormant accounts turned over
to the state alier statuatory time period .
174
ATTACHMENT # 2
$ 2.00 Fee For Cashing
Non - customer Check .
Effective 11/1/86
Note :
sikinis
that these are light cardboard signs posted at the teller station .
175
ATTACHMENT # 3
KENT CARRUTHERS
PRESIDENT
mo
P n.
The Citizens Bank of Clovis
COMMUNITY REINVESTMENT-ACT NOTICE
NOTICE :
The Federal Community Reinvestment Act ( CRA) requires
the Federal Deposit Insurance Corporation to evaluate our perfor
mance in helping to meet the credit needs of this community , and
to take this evaluation into account when the Federal Deposit
Insurance Corporation decides on certain applications submitted
by us .
Your involvement is encouraged .
YOU SHOULD KNOW THAT
You may obtain our current CRA Statement for this
community in this office .
( Current CRA Statements for
other communities served by us are available at our
head office , located at 5th and Pile Streets , Clovis ,
New Mexico) .
You may send signed , written comments about our CRA
Statement ( s ) or our performance in helping to meet
community credit needs to the office of the President ,
The Citizens Bank of Clovis , P. O. Box 1629 , Clovis ,
New Mexico 88102-1629 and to community Reinvestment
officer of the Federal Deposit Insurance Corporation ,
1910 Pacific Avenue , Suite 1900 , Dallas , Texas 75201 .
Your letter together with any responses by us , may be
made public .
You may look at a file of all signed , written comments
received by us within the past two years , any respon
ses we have made to the comments , and all CRA State
ments in effect during the past two years at our
office located at 5th and Pile Streets , clovis , New
Mexico .
( You may also look at the file about this
community at The Citizens Bank of Clovis , Main Office ,
5th and Pile Streets , Clovis , New Mexico ) .
You may ask to look at any comments received by the
Federal Deposit Insurance Corporation's regional
office at 1910 Pacific Avenue , Suite 1900 , Dallas ,
Texas 75201 .
You may also request from the Federal Deposit Insur
ance Corporation , Bank Supervision Division , Office of
Consumer and Compliance Programs , 550 17th Street
N.W. , Washington , D.C. 20429 , an announcement of ap
plications coveredby the CRA filed with the Federal
Deposit Insurance Corporation .
BOX
1 6 2 9
CLOVIS .
NEW
MEXICO
8 8 1 0 1
PHONE
5051769-19 11
176
ATACHMENT # 3
KENT CARRUTHERS
PRESIDENT
The
AVISO
Citizens
Bank
of
Clovis
SOBRE LA LEY DE REINVERSION EN LA COMUNIDAD
La Ley Federal de la Reinversion de la Comunidad ( " The
Federal Community Reinvestment Act : ( CRA ) requiere que la Corpor
acion ( FDIC ) ) evalue nuestras actuaciones encaminadas a ayudar a
satisfacer las necesidades de credito de esta comunidad , y que
considere esta evaluacion cuando el FDIC vaya a decidir sobre
ciertas solicitudes nuestras .
Su envolvimiento se favorece .
" Usted debe saber que :
-Usted puede obtener nuestra Declaracion de CRA para
esta
-Usted puede enviarnos sus comentarios escritos firma
dos acerca de nuestras Declaraciones sobre el CRA , O
sobre nuestras actuaciones para ayudar a satisfacer
las necesidades de credito de la comunidad a ( Presi
dente de el Banco de Citizens de Clovis , 5th and Pile
Street , Clovis , New Mexico . )
ya ( ofical de La Rein
version De La Communidad , corporacion
Federal
de
Seguro De Deposito , 1910 Pacific Avenue , Suite 1900 ,
Dallas , Texas 75201 .
Su carta , asi como cualquier
respuesta nuestra podra hacerse publica .
-Usted puede indagar en un expediente sobre todos los
comentarios firmados recibidos por nosotros durante
los pasados dos anos , cualquier respuesta que hayamos
hecho a los comentarios y todas las Declaraciones de
CRA en efecto durante los ultimos dos anos en nuestra
oficina principal localizada en ( 5th and Pile Street ,
Clovis , New Mexico ) .
( Usted tambien puede ver el
expediente sobre esta comunidad en ( oficial De La
Reinversion De La Comminidad , El Banco de Citizens de
Clovis , 5th and Pile Street , Clovis , New Mexico ) .
-Usted tambien puede ver cualquier comentario recibido
por la Oficina Regional de FDIC en la oficina de 1910
Pacific Avenue , Suite 1900 , Dallas , Texas 75201 .
-Usted tambien puede requerir de la Corporacion
Federal de Seguro de Deposito ( FDIC ) , 550 17th Street ,
N.W. , Washington , D.C. 20429 caulquier anuncio de
solicitud cubierto por el CRA ,
BOX
1 6 2 9
CLOVIS .
NEW
MEXICO
radicadas en el FDIC .
8 8 1 0 1
PHONE
5 05 / 769.19 1 1
177
The CHAIRMAN . Thank you very much, Mr. Carruthers.
STATEMENT OF J. BLAIR CULPEPPER, PRESIDENT AND CEO,
a
178
PROBLEMS WITH THE CHECK CASHING PROVISIONS
We also have practical problems with the Government check
cashing portion of the basic services bill.
2
Financial
Services
Access_te
frequently
presents
H.R.5094
is
what
in
proposals
two
"termed
ltransaction
banking
ab
ifeline
asic
and
account
benefit
checks
.government
for
privilege
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U.S.
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179
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Modernization
by
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the
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5094
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IV
Title
,Finance
Banking
House
the
.by
Committee
Affairs
Urban
and
184
The CHAIRMAN. Thank you , Mr. Culpepper.
STATEMENT OF JOHN M. KOLESAR, PRESIDENT AND CEO,
CUSTOMERS WOULD BE THE LOSERS
Instead of complementing the Senate's procompetitive reforms,
title IV promotes a scheme of punitive interference in our joint ef
forts to serve our customers and your constituents. Except for a
small subset of the population, customers would be the losers, not
the beneficiaries of title IV's formula for credit allocation and sub
sidized entitlements .
1
1
185
CBA finds title IV's CRA provisions in particular to be fatally
flawed . Notwithstanding this view , we do suggest, as Senator Bond
has requested, certain refinements to the existing Community Re
investment Act and we will offer additional ideas that may merit
the committee's consideration .
RECOMMENDATIONS FOR IMPROVING CRA
Let me move, Mr. Chairman , to the specific recommendations
that we might make for improvements in the existing Community
Reinvestment Act.
186
We would support public notification of branch closings and we
would encourage a scheme of CRA credit, if you will, for voluntary
basic banking and government check cashing services.
Thank you .
[ The complete prepared statement of John M. Kolesar follows:]
deen
be
Congress
cannot
refinerents
should
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ASSOCIATION
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187
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to
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concerns
188
low
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The CHAIRMAN . Thank you very much , Mr. Kolesar.
STATEMENT OF THOMAS P. RIDEOUT, VICE CHAIRMAN , FIRST
PROVISIONS OF TITLE IV ARE UNACCEPTABLE
While the ABA supports the purposes of the Community Rein
vestment Act, we must oppose the CRA provisions in title IV of
H.R. 5094. They are unworkable and unacceptable for at least five
principal reasons:
206
loans to " meet"
low - income, small- farms, and small-business
needs — all of this without considering safety and soundness. The
proposed scheme would lead to a permanent system of credit allo
cation .
Contents
of
Table
Page
STATEMENT
PREPARED
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VIII
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8, 988
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APPLICATIONS
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257
States
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258
York
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-10
-11
GOVERNMENT
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WITH
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Connecticut
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APPENDIX
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AND
ANALYSIS
CLOSING
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5094
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oRequires
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and
65
old
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.18
259
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Association
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THRIFT
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D
SUBTITLE
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-2
SAVINGS
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Analysis
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Savings
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APPENDIX
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7
APPENDIX
H
SUBTITLE
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AMENDMENTS
ACT
OPPORTUNITY
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and
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process
.application
approval
credit
of
272
273
The CHAIRMAN . Thank you very much, Mr. Rideout.
STATEMENT OF DAVID J. SULLIVAN , PRESIDENT AND CEO, ME
274
and counterproductive. We maintain that these provisions of title
IV , as currently drafted , are unworkable and impractical.
1
.
1
ness .
The House committee has justified the stronger CRA require
ments with the following argument: a concern that when banks get
greater securities powers, they will concentrate more on securities
activities and less on meeting consumer needs.
LIFELINE BANKING SHOULD BE ADDRESSED AT THE STATE LEVEL
The national council also believes that Lifeline banking issues
are most appropriately and effectively addressed at the State level.
In fact, several States, including Massachusetts, New York , Ohio,
and my own State, have already enacted laws addressing govern
ment check -cashing regulations.
INTRODUCTION
Chairman
mMr.
Committee
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PROVISIONS
5094
H.R.
OF
IV
TITLE
IN
PROTECTION
CONSUMER
National
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IV
Title
provisions
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1988
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Septemb
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,Dirksen
538
Room
Building
Office
Senate
275
will
both
address
alternative
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Congress
of
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-3
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276
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IV
Title
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.requests
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277
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284
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5094
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IV
. ut
285
The CHAIRMAN . Well, thank you very much, Mr. Sullivan .
286
Mr. KOLESAR. That's correct, Mr. Chairman .
287
The CHAIRMAN . Mr. Carruthers, you say on page 3 of your testi
mony that the IBAA believes that the Government check -cashing
provisions in title IV of the House bill need further improvement.
SAME DAY AVAILABILITY OF FUNDS
Would the IBAA support the provision if it provided for the
direct deposit of government checks and if the customer could have
the funds on a same-day availability for withdrawal?
288
an oil company. That list has been narrowed down to, I believe it
is, six secondary identification forms which are satisfactory, and we
expect that will begin
a
DISCLOSURE OF CRA RATINGS
Mr. SULLIVAN . Well, speaking for our own institution , disclosure
would not be a problem because I think we do an exceptionally fine
job.
289
Mr. SULLIVAN . As a basic principle after the examination has
been conducted and if disclosure - if the Congress said we had to do
it, of course we would do it. I don't see that there would be any
great benefit from it. Nor do I see that there is any great detri
ment.
a
290
ought to be a matter of public policy ? Do you feel comfortable with
it in terms of it representing individual financial institutions or
sectors ?
COMMUNITY INVESTMENT
Mr. RIDEOUT. Senator Riegle, I would be delighted to begin the
responses by saying first of all that the American Bankers Associa
tion and our member institutions very strongly support the intent
and purposes and the premises of CRA as it was passed in 1977 .
291
of organizations that also suck deposits out of a community; specifi
cally, insurance companies and mutual funds.
292
But there is enough data that has been collected and continues
to surface
and I know we can talk about the methodologies as to
how the studies are done - but there certainly seems to be some
amount of evidence that would indicate that black citizens seeking
loans of various kinds have a tougher time, especially in urban
areas, getting access to credit or mortgages than either white
people do or if they were living in other suburban areas.
LOANS TO BLACK CITIZENS
Mr. RIDEOUT. I would be very happy to address that with particu
lar reference to the city of Atlanta, GA, where our bank has a
banking operation .
293
tors, say, or your minority depositors who were whatever percent
of your total business and in fact proportional to your otherdeposi
tors the loan ratios, whether for new mortgages or for home im
provement loans, there was substantial variance between these, if
you saw that cropping up in your numbers, would that cause you to
look at that issue and say to yourself, you know , maybe there's a
problem , maybe they're not finding us, we're not finding them ,
maybe there are some blockages in the system ?
a
294
Now, you can see that there is reason for blacks to be concerned
about this and for feeling that there is real discrimination in
volved .
295
tell you that, from my part just looking back in time , I don't aim
this at you, but, you know , we've invested an awful lot of money
through the banking system in foreign countries-a ton of money
that isn't being paid back .
>
296
Senator RIEGLE . And I don't mean to aim just these comments at
you. Please understand that.
297
I'm setting that up to pose a different kind of a concept for you .
It seems to me one great strength you have as financial institutions
is to be able to go in and make risk appraisals, to be able to assess
the wisdom of an investment, the wisdom of a loan, whether it's to
an individual, to a small company. We're talking about inner city
or we're talking about minority borrowers or lending applicants, or
what have you .
a
298
could maybe do a job that goes way beyond what we presently are
doing, or feel that we can do.
299
We lost $ 3 million on that $ 30 million; by the time the foreclo
sures were taken care of, the defaults , that's what — and we passed
that money along at 50 basis points. We didn't make a nickel on it.
now .
Mr. SULLIVAN . Well, thank you, sir. ( Laughter.]
I wish Mr. Seidman was here to hear that. [ Laughter.]
Mr. RIDEOUT . Senator , may I-
300
terms of good beneficial community reinvestment activity per
dollar spent.
1
301
his vantage point, that the CRA loans had turned out to be gener
ally pretty good loans.
PROVISIONS AIMED AT STRENGTHENING THE
FRIDAY, SEPTEMBER 9, 1988
U.S. SENATE ,
COMMITTEE ON BANKING , HOUSING , AND URBAN AFFAIRS,
OPENING STATEMENT OF CHAIRMAN PROXMIRE
The CHAIRMAN. The committee will come to order.
( 303)
304
checks, truth - in -savings, branch closings, and even Lifeline banking
services.
OPENING STATEMENT OF SENATOR GARN
Senator GARN . Thank you, Mr. Chairman .
Thank you .
305
The CHAIRMAN . Thank you , Senator Garn .
Senator D'Amato ?
Senator D'AMATO. Thank you, Mr. Chairman .
OPENING STATEMENT OF SENATOR ALFONSE D'AMATO
Senator D'AMATO. Mr. Chairman , as you know I consider the
Senate banking bill grievously flawed in its failure to properly bal
ance between the interests of the banking industry and the safety
and soundness of the banks themselves. However, I will not belabor
that point; we have had that debate already.
306
local community. In this sense, CRA is a landmark piece of legisla
tion, and we believe it's time to strengthen it.
STRENGTHENING THE CRA
The first reason was documented fairly well in the hearings
which you held last March , your CRA oversight hearings. The wit
nesses there made a very strong case that generally speaking there
is a lot more that banks could do to serve local community credit
needs. Some banks have done well, others have done very poorly.
But generally, on average , there seems to be a feeling that more
should be done .
#
307
Now , quickly shifting to CRA as we see it and how we would like
to reform it, I think it is useful to view CRA as having three com
ponents. First, there are the assessment factors, which the agencies
laid out in their regulations; and we think they did a good job . We
think they followed the intent of Congress.
a
BANK REGULATORS ARE NOT ENFORCING THE LAW
I come here today to implore you to pass title IV of the House
banking bill. The Community Reinvestment Act, which was created
by you , Senator Proxmire, is not working, not as you intended it to
work. The regulators are not enforcing the law as it was written.
The banks are not funneling moneys back into our communities as
the law is supposed to mandate.
308
But banks have run up record profits in just 3 months of this
year alone, they earned $ 10.5 billion . Now, how can anyone tell me
and my people that some of that money could not be channeled
back into our neighborhoods ?
309
intend and have been working with us. And for that, we are grate
ful to them.
STATEMENT OF ALLEN FISHBEIN, GENERAL COUNSEL, CENTER
310
that in the past 3 years they have received more CRA protests
than they received in the first 7 years that the act was in exist
ence. And CRA enforcement by the regulators is clearly inad
equate, as the testimony before the oversight hearings last March
clearly pointed out.
311
to the banking system than it once was, so it is important to
extend the coverage of CRA to nonbanking activities which are per
ceived as being more lucrative to the industry.
I.
INTRODUCTION
OF
TESTIMONY
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312
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313
development
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314
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7
-
90-163 0 - 88 - 11
ital ions
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1977
REINVESTMENT
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315
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344
5
345
The CHAIRMAN . Thank you , Mr. Fishbein .
PROPOSAL BY FED
Mr. FISHBEIN . First of all, Mr. Chairman, I think it is an impor
tant step forward. It is important for the Fed to recognize the need
for more access to information about the performance of local
banks.
346
Ms. M. BROWN. But, you see, they are all across the board get
ting above-average ratings, and they're not doing the job anyway.
So, it's like you say, a misnomer.
ESTABLISH A STANDARD
Senator GRAHAM . To follow up on the question that Senator
Proxmire was just asking, would it not be more feasible to establish
347
an absolute standard: “ This is what is expected in order to be in
compliance with your CRA obligations," and then certify either on
a pass-fail basis that you met that standard or that you did not ?
90-163 О
- 88 - 12
-
348
being served . He made the observation that he felt that that third
part of the partnership, the communities, had not been carrying
their appropriate responsibilities, and cited the fact that frequently
examination of the file of a bank by a regulator will be void in
terms of comments by community members or groups as to how
well that bank is serving the community.
349
STATEMENT OF SENATOR DONALD W. RIEGLE , JR .
COMMUNITY AND CONSUMER BENEFITS
IN HOUSE BANKING BILL
SEPTEMBER 9 , 1988
10:00 a.m.
Today , we hear from witnesses whose groups have worked
tirelessly in an effort to make sure that our financial laws are
fair to consumers and to communities and that local community
economic development is encouraged
We are currently conducting our own review of problems that
have been brought to our attention in Detroit so I hesitate to
consider that situation now .
However , we have reviewed the
Atlanta situation , and the statistical allegations are alarming .
In Atlanta it is alleged that :
* Banks return an estimated 9 cents of each dollar deposited
by blacks in home loans to black neighborhoods ; they return
15 cents of each dollar deposited by whites in home loans to
white neighborhoods .
If true , this constitutes a serious
disinvestment problem .
* The largest banking institutions take home loan applications
in offices predominantly in white neighborhoods .
Several
banks have recently closed offices in black areas , yet
opened them in white neighborhoods .
* Two lenders that volunteered rejection data showed they
turned down black applications four times as often as white
applicants .
350
The Committee heard concern yesterday from one thrift lender
that making loans to minorities and low income groups can be
risky
Well , according to the Atlanta study , the bank with the
lowest default rate on real estate loans of any bank its size in
the country is a black - owned institution that lends almost
exclusively to black neighborhoods .
Our witnesses today have championed the need for basic
banking services for all Americans .
When it comes to community
reinvestment , these groups have served as the front line in
highlighting discrimination .
That should be the task of our
regulators .
It is encouraging that a number of the regulators and bankers
that the Committee heard from yesterday embrace the public merits
of community reinvestment goals , and acknowledge that
improvements can be made .
Specifically , there is emerging
agreement that CRA assessments be disclosed and that examinations
be more vigorous , possibly by specialized supervisors .
A renewed
commitment to community reinvestment is important and , Mr.
Chairman , Icommend you for your past and current leadership in
that effort .
351
STATEMENT OF SENATOR JIM SASSER , SENATE BANKING COMMITTEE ,
SEPTEMBER 9 ,
1988
MR . CHAIRMAN , I AM PLEASED THAT WE ARE CONTINUING OUR
HEARINGS ON THE CONSUMER PROVISIONS OF THE HOUSE BANKING BILL .
AS THE TESTIMONY TODAY WILL INDICATE , MANY OF THESE PROVISIONS
ARE WORTHWHILE AND WILL BE OF GREAT BENEFIT TO CONSUMERS .
MOST IMPORTANTLY , MANY OF THESE PROVISIONS CAN BE ENACTED WITHOUT
AFFECTING THE SAFETY AND SOUNDNESS OF THE BANKS .
I THINK IT'S STARTLING HOW MANY FAMILIES IN THIS COUNTRY DO
NOT HAVE ACCESS TO BANKING SERVICES .
PEOPLE ARE PAYING UP TO 6 %
OF THE FACE VALUE OF A GOVERNMENT CHECK TO CASH THAT GOVERNMENT
CHECK AT A CHECK CASHING " EMPORIUM . "
EVEN CUSTOMERS OF BANKS ARE
OFTEN REQUIRED TO HAVE THE BALANCE ON DEPOSIT BEFORE THE BANK
WILL CASH THE CHECK .
.l .
352
OBVIOUSLY , THESE ARE PROHIBITIVE BURDENS FOR LOW INCOME AND
RETIRED PEOPLE .
AND THEY ARE UNNECESSARY .
I DO NOT BELIEVE THAT
REQUIRING BANKS TO OFFER BASIC BANKING SERVICES WILL AFFECT THEIR
SAFETY AND SOUNDNESS .
AND IT'S CLEAR THAT BANKS CAN BE BETTER IN THE AREA OF
COMMUNITY REINVESTMENT .
REDLINING IS STILL A FACTOR IN MANY OF
OUR URBAN NEIGHBORHOODS .
WHETHER WE NEED TO GO AS FAR AS THE
HOUSE BILL DOES ON CRA IS ANOTHER QUESTION ; THERE WE COULD HAVE A
SAFETY AND SOUNDNESS IMPACT .
MR . CHAIRMAN , I THINK THAT MANY OF THESE PROVISIONS SHOULD
BE ENACTED .
INDEED , THEY WOULD ENHANCE THE PROXMIRE BILL , AND
HELP MAKE IT MAJOR STEP FORWARD IN BANK SERVICE TO BUSINESSES ,
CONSUMERS AND COMMUNITIES .
THANK YOU .
353
Senator RIEGLE. Let me also say again how much I appreciate
your leadership in having these particular hearings today and also
the testimony of the witnesses that are here and, more than that,
their commitment to these issues and of their organizations to
these issues .
CONFLICTING REPORTS ON LOAN EXPERIENCES
Yesterday we heard conflicting reports—I don't know whether
you indicated whether you were here yesterday or had the chance
354
to see the testimony that was given yesterday. I assume you are
generally familiar with it — but we had a Connecticut banker who
said he lost money in that kind of a lending activity, and an Ohio
banker at the same time who said his default rate was even lower
on the CRA loans than the bank's overall portfolio .
355
But maybe we ought to be thinking about some kind of a new
hybrid arrangementwhere the Federal Government actually gets
involved on the margin with that increment of risk that may in
fact be there in some situations so that we don't draw the line so
far away from granting credits where there is a higher level of
risk , that in fact we cause a downward spiral within an area. It
seems to me that if an area can't refinance itself, keep itself vi
brant, keep itself strong, that that is almost a certain recipe for
going down the drain .
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362
PUBLIC DISCLOSURE COULD HAVE A POSITIVE EFFECT
The CHAIRMAN. Mr. Fishbein , if the CRA ratings were disclosed
publicly, some regulators worry that their examiners would face
new pressures, banks would haggle about low ratings and high rat
ings, and this would ignite public criticism.
363
Freddie Mac has not imposed any restrictions which I believe could adversely
affect lenders in carrying out their CRA responsibilities. To the extent that borrow
ers are told by lenders that their applications have been denied because of increased
secondary market restrictions, I am concerned about this. It may be that Freddie
Mac is more often an excuse than the real reason that a loan may not be made.
a
364
As I said yesterday when this committee invited community
groups, last March , to evaluate the performance of Federal bank
ing agencies' enforcement of the Community Reinvestment Act,
these groups were tough graders. Each of the bank regulators were
given failing grades.
RATING SYSTEM
Mr. BROWN. Senator Heinz, I think you are coming to what I feel
is a latent, but ultimately very important, issue here; and that is, if
it is possible to put in place a public rating system that is well
founded and has enough information to make the ratings legiti
mate
365
Senator HEINZ. By the way, I am assuming — and I didn't state
this at the beginning — that such a rating system would be devel
oped only after consultation with community groups. It isn't done
that way now, but that is the way it ought to be done. I am assum
ing it would be done right.
ance .
366
I think the agencies' reluctance to accept this idea of full disclo
sure of the CRA examination report is not based on any legitimate
public policy. Obviously, in regard to safety and soundness exami
nation reports, there are policy reasons for not disclosing them,
the possibility of triggering a run on the bank . Even for consumer
compliance reports, which may cite violations of consumer credit
laws where there is potential legal liability on the part of the bank ,
there is an arguable case to be made for not disclosing exam re
ports.
367
Mr. FISHBEIN . The point that needs to be stressed is the interre
lationship between reforming the CRA evaluation system and the
rating criteria and the disclosure of evaluations.
STATEMENT OF JUDITH N. BROWN , MEMBER, BOARD OF DIREC
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4
5
372
The CHAIRMAN . Thank you very much, Ms. Brown .
STATEMENT OF PEGGY MILLER, LEGISLATIVE REPRESENTA
TIVE, CONSUMER FEDERATION OF AMERICA, WASHINGTON, DC
port it .
So we are coming before you because basically the bill that is on
the House side is very well -drafted legislation . The check cashing
provisions dealt with a number of the concerns that were brought
up .
373
refuse any fraudulent check . These sorts of things were all provid
edto address the banks' concerns regarding fraud. A long list.
LIFELINE BANKING
The banking industry claims that Lifeline banking is being pro
vided by 52 percent of the banks. The problem with this statistic is
simply that they are not includingminimum balance, maintenance
fees, and opening requirements. When you include all those things,
many of those accounts they call basic bank accounts can be higher
in cost, according to GAO even , than the current standard account.
374
tee was to move this , that the Senator could leave his long tenure
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380
The CHAIRMAN . Thank you, Ms. Miller.
FRAUD LOSSES
The CHAIRMAN . Let me ask you then, are fraud losses a legiti
mate cost that should be recovered in the fees charged for check
cashing ?
-
381
explicit pricing no longer can banks make huge profits from low
interest savings and no-interest checking accounts.
382
The other point is that check -cashing outlets themselves, the
only statistics I was able to find were in a couple of press articles
back in 1985, that they basically were showing a lower check
bounce rate than banks.
383
When you move into the national level there have been some
enormous problems that have been associated with direct deposit,
as AARP has experienced .
96
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RH
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RH
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13
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108
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RH
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RH
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RH
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RH
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160
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RH
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RH
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162
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TITLE
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FINANCIAL
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BASIC
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11
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(a)2-TIER
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14
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A
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25
RH
5094
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19
20
.—T(1)Ihe
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Governors
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21
18
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RH
5094
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164
163
1
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11
12
418
RBASIC
(c) EQUIREMENTS
ALL
FOR
FINANCIAL
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166
165
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RH
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GOVERNMENT
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15
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171
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ADMINISTRATIVE
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22
A.—(a) ompliance
DMINISTRATIVE
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23
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RH
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RH
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173
174
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RH
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176
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424
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DATE
14
subtitle
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Thrift
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18
18
SHORT
431.
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.19
TITLE
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20
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1988
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21
20
:
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21
REQUIREMENTS
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432.
SEC
22
BANKS
NATIONAL
.FOR
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CURRENCY
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OF
COMPTROLLER
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23
the
.-In
REQUIRED
24
national
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25
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5094
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25
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RH
5094
HR
178
177
(3)afinancial
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14
15
16
17
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19
20
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24
25
CURRE
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RH
5094
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H1004
RH
179
180
DON
(1) ETERMINATION
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CONFORMING
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17
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36
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1988.
RH
5094
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RH
5094
.HR
426
reduction
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182
181
.1S33.
INSTITUTIONS
THRIFT
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17
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. 52.
SEC
418
EFFECT
STATE
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19
close
This
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20
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21
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SEC
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53.
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456
Consumers
blisher of Consumer Reports
The Honorable William Proxmire
Chairman
Senate Banking Committee
Washington , DC 20510
Dear Chairman Proxmire :
For the record , I request that you include this letter
into the hearing record . We look forward to working with you
and your staff on all these important issues during the coming
weeks .
Yours truly ,
Muell
Michelle Meier
Counsel for Government Affairs
Washington Office
Suite 520, 2001 S Street , Northwest · Washington , D.C. 20009 : ( 202) 462-6262
457
Credit Union National Association, Inc.
5710 Mineral Point Road, Box 431 , Madison , WI 53701-0431, 608-231-4000
负
Ralph S. Swoboda
President
608 /231-4010
September 19 , 1988
The Honorable William Proxmire
Chairman
Committee on Banking, Housing and
Dear Mr. Chairman :
As President of the Credit Union National Association ( CUNA ) , the trade
association that represents virtually all of the nation's state- and
federally chartered credit unions and ther 58 million members , I am
pleased to comment on the consumer protection provisions in Title IV of
H.R. 5094 , the Depository Institutions Act of 1988. I request that these
comments be included in the Committee's hearing record of September 8 ,
1988 .
The credit union movement ( CUNA ) has long supported legislative efforts to
improve the manner in which financial services are provided to American
consumers and to curb abuses which arise from time to time in the
financial community . We continue to do so . In recent years , however , we
have come to realize that unless most of these legislative measures are
specifically modified, they will inexorably work to erode the unique
Therefore , CUNA has worked to oppose
standardized across the board proposals unless changes are developed which
simultaneously meet the goals of the authors of the legislation and permit
nature of credit unions .
credit unions the flexibility of operating in their traditional fashion .
We are most pleased that the Senate and House Banking Committees have
worked with CUNA In accomplishing these goals .
Credit unions were created as an alternative to the traditional banking
system to provide affordable financial services to working Americans .
Consumers who were excluded from the commercial banking system because of
limited financial resources banded together to form these democratically
controlled financial cooperatives .
That financial alternative , the credit
union movement , has grown into a $ 190 billion network providing consumer
credit for more than 58 million Americans .
Not only has the movement
become immensely successful, but it has done so while retaining the
original credit union principles. In other words , the credit union
structure has not been changed . Credit unions are still non - profit
458
cooperatives, with no capital.stock, which are mutually owned , directed by
volunteers, democratically controlled and motivated by service to members
rather than profits for shareholders.
Some consumer protection laws have recognized the credit union difference .
Mr. Chairman , as you know , the 1977 Community Reinvestment Act , which you
sponsored to " establish a system of regulatory Incentives to encourage
banks and savings institutions to more effectively meet the credit needs
of the localities they are chartered to serve , " does not include credit
unions .
The consumer protection provisions in Subtitle A of Title IV in
the House Banking Committee bill contain more rigorous criteria for
evaluating the performance of depository Institutions in meeting community
needs , and once again credit unions are not included .
Community reinvestment requirements are not meaningful for credit unions
because as
Likewise , Section 411 of the House Committee bill provides for the
establishment of consumer divisions within financial institution
regulatory agencies to determine the extent to which financial
institutions are in compliance with laws and regulations relating to
consumer protection , including community reinvestment laws . Section 411
does not require a consumer division to be established within the National
Credit Union Administration .
CUNA appreciates these acknowledgements of credit unions ' performance In
meeting consumer needs .
Other provisions in Title IV which do effect credit unions also address
their unique structure .
For instance :
Basic Financial Services Account/Government Check Cashing:
Section 422 of H.R. 5094 would require financial institutions to offer a
two - tier basic banking account to provide low - cost transaction and
government check cashing services for low- and moderate - income families .
Approximately two - thirds of all credit unions do not offer transaction
( share draft ) accounts . Practically all of those that do offer these
accounts are voluntarily providing the services required by H.R. 5094 .
" Lifeline banking " was a credit union practice long before the term was
A similar situation exists for credit union check cashing
practices . More than 65% of all credit unions have no cash operations .
However , the vast majority of those that do keep cash on the premises
even invented .
voluntarily cash government checks free of charge for members .
H.R. 5094 responds to the uniqueness of credit union operations and
effectively preserves the right of elected credit union officials to
determine the products and services available to members .
As reported ,
the provisions of Title IV would require only depository institutions that
currently offer transaction accounts to maintain a basic transaction
service and only those credit unions which , in the ordinary course of
business , cash checks , to do so free of charge for members .
CUNA supports and appreciates these modifications .
459
Truth in Savings :
Section 441 of H.R. 5094 contains virtually the same truth - in - savings
requirements as those in Title VI of the " Financial Modernization Act of
S. 1886 . Both bills contain provisions that would permit the
National Credit Union Administration ( NCUA ) to promulgate regulations for
The language in both bills would give the NCUA the
credit unions .
1988 , "
necessary flexibility to accommodate the unique structure of credit union
accounts .
CUNA supports the truth - in - savings provisions for credit unions in both
the House and Senate bills .
Home Equity Disclosure :
With respect to the Home Equity Loan Consumer Protection provisions as
contained in the House bill , we would strongly request that the credit
union accommodations incorporated in the Senate -passed version prevail .
Specifically we refer to Title VII of s . 1886 Sec . ( d) ( 2 ) ( B )
Special
Rule For Credit Unions . This provision would permit credit unions so
desiring to use their individual cost of funds as the index required by
-
the legislation so long as such cost of funds does not exceed the prime
rate as published by the Federal Reserve .
Such cost of funds must be
published and distributed by those credit unions to their members on a
quarterly basis .
There are many reasons for using cost of funds, such as less volatility
and generally lower rates for the consumer , but our prime contention flows
from a recognition of a basic credit union difference . Member owned
credit unions are simply not led to a practice of charging unnecessarily
high rates to their members nor deliberately misleading them as to the
nature of the rate .
We have not received reports of credit union abuse
with respect to these home equity loans and we feel
@FedFRASER