Question & Answer

Question: We have conducted a self-assessment for CRA and fair lending and concluded that we need to increase our lending to minorities in our community. Can we create special programs to increase our minority lending even though the borrowers may not be low income?

Answer: Your self-assessment has helped you to identify a loan portfolio weakness and you are right to take steps to strengthen minority lending. However, don't lose sight of the provisions in Regulation B that deal with special purpose credit, ?202.8.

The rules for special purpose credit exist to enable targeted lending that is designed to correct for the impact of past discrimination. However, ?202.8 has anti-discrimination rules of its own. Be careful not to trip into a violation of these.

Special purpose credit must meet one of several criteria. It must either be a federal or state program, a program offered by a not-for-profit organization (hopefully your bank is not in this category) to benefit an economically disadvantaged >
Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 20, 12/96