CRA struggles for small large institutions

Question: Our bank is a large bank under the CRA regulations but only about $400 million in assets. We have struggled to maintain a Satisfactory rating because finding and making appropriate community development investments and community development loans is difficult. Will the regulatory review that is now underway make things easier for us? We'd love to see the investment test go away.

Answer: The review of CRA now being conducted by the bank regulatory agencies is thorough but limited. Your concerns with the community development loans and investments are shared by many institutions in your size category. That is definitely an issue that is under review. However, there are absolutely no guarantees that these tests will go away.

This limited review of CRA is to evaluate how well the regulation is working. The review is not intended to be a zero-based rewrite of the regulation like the previous review. We can expect the agencies to propose some modest modifications to the three tests and how the scores are weighted. But don't look for structural or substantive change.

No matter what the proposal looks like, you really should comment on how the proposal will affect your institution. The comment process is the most reliable and effective way for agencies to compile information about how things really get done. If you don't comment, you are actually withholding this information from them.

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 16, 1/02