ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release January 24, 2005 #05-01
E-mail: [email protected]

ACB STRONGLY SUPPORTS ADDED FLEXIBILITY TO CRA REQUIREMENTS

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WASHINGTON, D.C. — America’s Community Bankers said today that it strongly supports a proposal by the Office of Thrift Supervision that would give large savings associations added flexibility in serving the credit needs of its communities. ACB represents more savings institutions, including those regulated by OTS, than any other trade association.

In its comment letter to the agency, ACB said it supports the goals of the Community Reinvestment Act, but has longstanding concerns “about the burden that is imposed by a regulatory structure that is rigid and inflexible and does not take the differences in communities into account.”

ACB added: “We are concerned that the original purpose of the statute has been distorted in an effort to develop regulatory requirements that do not adequately address the variety of charter types and changes in the industry.”

The OTS proposal, ACB said, “provides a good alternative to the current rigid three-pronged test.” The lending test would continue to be counted for at least 50 percent of the CRA requirement, but associations would have the flexibility to set the weightings of the investment and service tests. ACB views the proposed changes as “real regulatory relief” and an important cost savings.

“Providing the flexibility to determine how much weight should be assigned to the lending, investment and service tests will permit large savings associations to make choices involving the community that are based on what it needs,” ACB said.

“In fact, we believe that communities will be served better because associations will tailor products and services to the particular community,” ACB said. “Management of these associations will not have to seek out investments just to show that they are making them.”

The OTS proposal reflects the need for a flexible regulation that encompasses the new activities being undertaken by community banks. ACB emphasized the importance of examiner training and guidance to help examiners understand the innovative and complex transactions that frequently involve community lending. “A more open, consultative examination process would be welcome.”

ACB also supported the proposed revision of “community development” as a way to provide greater flexibility in granting CRA credit to activities in rural communities. OTS and the other regulators were also urged to develop a nonexclusive list of activities and investments that will satisfy the community development criteria. Examples could include Habitat for Humanity projects and Federal Home Loan Bank Affordable Housing Program investments.

Click here to read the comment letter. Charlotte Bahin, ACB’s senior vice president for regulatory affairs, is available to answer questions.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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