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Community Reinvestment Act
The Community Reinvestment Act (CRA) has been a law for 14 years. Only lately has it gotten the attention and the publicity regarding the requirements of meeting the needs of communities.
Two years ago Congress required that financial institutions disclose the compliance ratings assigned by regulators following examinations.
The final rule regarding CRA requires that financial institutions place their CRA performance evaluation and CRA rating in their public comment file within 30 business days of receipt of the results. Banks must make the evaluation and rating available for public inspection and provide copies of the them, upon request, to interested parties. They may charge a reasonable fee for reproduction and mailing.
Hard Figures
Meeting the requirements of the CRA legislation has not been easy nor inexpensive. One banker, whose institution has $90 million in assets, estimates he has spent four days total this year on CRA compliance, and that another employee will spend almost four weeks to ensure a good rating. Another banker said it cost his $75 million institution $50,000 in expenses. And a third banker said it is costing his $53 million institution $25,000 annually for CRA reporting.
These bankers and others maintain that even removing the requirement to comply with CRA would not alter their lending practices. It seemed to them to be an unnecessary and needless piece of legislation.
BANKERS' HOTLINE will keep you posted as to any changes made to the Community Reinvestment Act requirements as they occur.
Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 7, 8/91
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