I got an answer from OCC as well, checked their in-house Q&A boards and yes, you have to report in order to preserve your option to go Large Bank exam. Additionally, if you are in smaller communities, it may be more difficult to get a satisfactory under the "new, flexible community development test". So would someone tell me how the banks benefitted from these new rules????

The only possible benefit I see is if examiners make the CD Test a fluff piece. Its difficult to see right now how many ISB's are going to pass if examiners strictly enforce the requlation.

This is not meant to be a critism of anyone posting, so please don't take offense if I say something that resembles anything anyone posted, this is just my opinion.

Already there is a wide difference in what preparing a "Community Needs Assessment" means. IMO its an in-depth study, based on hard research, of what financial and economic assistance and services are needed primarily by LMI individuals in the community.

Some institutions are indicating that making a phone call or doing a mailing once a year is going to satisfy that requirement. No, I think to pass, it has to be a lot more than that. It has to be a real survey which contains a variety of information gathered from a variety of community groups and organizations. It should not be a bank officers opinion of what they think is needed, or is written as a creative writting piece that manipulates every tiny situation as providing some benefit to the community, as some have suggested.

I see in the Q&A proposal that they will be counting employee participation that offers financial advice and counciling to groups and organizations, and even some credit, if there is a branch in an LMI classified census tract. Unfortunately some ISB's are thinking that this is going to be the meat of the test. Again I don't think so, as there is a part of the exam that says examiners will look at the Number and the Dollar Amount of the banks Community Development lending activity. To me thats the meat of the test.

LenS and I have been espousing the problems and potential pitfalls of the Community Development Test since September. The dangeling carrot of not have to report anymore brought a lot of Yoo Hoo's isn't that great comment letters to the fed's. So here we are with a Community development Test.

A bigger question would be if it was intended to be a work reduction program, then why add this test at all? Who came up with the idea of a Community Development Test in the first place and why? Is there a social engineering motive behind its implementation? OR was this so horribally not thought out, that at this point even regulators are wondering what can of worms they opened up.

The upshot of this soap box missive, is that either there is an intent to perform some social engeneering via banks and a hard line will be adopted in the examination process, which many institutions will fail, Or its a can of worms not to be opened, and as long as a bank shows its employess belong to a couple organization that meet for lunch once a month, and it makes a couple loans a year,they are going to pass.

IMO we don't know yet. But if it's the latter,then what are we doing this at all for?