What Each Person Needs to Know
Several years ago, the CRA regulation was revised to move away from a CRA program evaluation based on meetings and ideas toward a CRA program evaluation based on proven actions. The idea was to reduce the documentation game that had become the core of CRA compliance. The idea was also to enable banks to streamline programs and run CRA activities in whatever way they chose as long as the method produced results. Examiners would look at and evaluate the results.
The problem, then, is how to get results. Boards of Directors and CEOs were eager to be free of the obligation to hold meetings with community groups and then report on the meeting to the CRA officer. In fact, everyone in the bank was looking forward to no longer filling out the obligatory community contact forms. However, dismantling the CRA program based on the 12 assessment factors (remember them?) is not the way to get results.
The problem is that whether the regulator evaluates your bank's program or your bank's results, you need a program to get results. In that respect, nothing has really changed. And because you need a program, you also need training. Programs only work if people know what to do.
It follows that you need CRA training. Your training should be based on what people need to know. To motivate bank staff, consider instituting a CRA Idea Award - some form of recognition for any (and we mean any) bank staff that brings in an idea that turns into a part of your CRA program. Consider covering the following points - with properly selected audiences, of course.
- CRA is all about the Bank providing complete and useful services to our community. We are chartered to "serve the convenience and needs" of our community. CRA is simply a law that restates and strengthens this duty.
- Describe the bank's assessment area, the market, and identify some of the demographic and economic issues that the CRA program must respond to, such as a large immigrant population, blue-collar v. high-tech work, a high proportion of elderly residents, and the like.
- The front line staff in the branches is the bank's front line for learning about product and service needs - or deficiencies - in our business market. Encourage the front line to play a key role.
- Like fair lending, CRA means that each of us should be sensitive to credit and service needs in our community. Service needs include deposit products, branch locations, hours of business, and the like - everything we do in addition to lending. Encourage the front line customer-contact staff to observe and bring in ideas for product and service needs.
- The front line staff in the branches is the bank's front line for delivering on the bank's promises: products, service, and quality. Encourage all customer contact staff to concentrate on delivering quality service to each customer that comes in the door.
- With your branch staff, including tellers, branch managers, and customer service reps, describe how the lending program is the core of CRA performance. But emphasize that branch staff is "The Bank" to the customer. Branch staff are the people that customers see when they enter the bank and when they do business in the bank. The extent to which branch staff succeeds at delivering friendly and effective service to every consumer who walks into the bank is a foundation of the bank's CRA program. In short, the success of the lending program depends on them.
- With your lending staff, you should have a more detailed discussion about flexible lending, any special loan programs, and lending to low and moderate income borrowers in your community. Briefly describe your loan programs and explain which ones really count toward your CRA rating.
- Training sessions may also be an opportunity to bring up and discuss any deterrents to the CRA program. This could include a compensation system that motivates loan officers to go for the big, easy loans at the expense of the affordable loans that may take more work.
- Make sure that everyone in the bank knows about any special working relationships the bank has forged with community groups and credit counseling organizations so that bank staff recognizes and supports these efforts.
- And of course, point out the CRA notice and discuss the public file location and availability.
Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 11, 10/99
First published on 10/01/1999