CRA Ratings - Too High?

Under the new regulation and examination procedures, small banks are earning high CRA ratings. For example, FDIC has completed 670 "new" CRA examinations in 1996. Of those banks, 29% earned an outstanding rating. This compares to 19% earning outstanding in 1994. This reflects what community banks have said all along that they either serve their community or go out of business.

The good news is that the ratings mean that banks are doing a good job of lending. There is a down side to this, however. These results are not going to please community groups who believe that CRA ratings should reflect a bell curve. We can expect these groups to increase their pressure for strong CRA enforcement and to direct attention to small banks. Remember, 1996 is an election year!

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 10, 6/96