New Rules Seek Compromise over Lending in Needy Areas

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A COMPROMISE PLAN aimed at expanding loans to needy communities and minorities while easing the paperwork burden on banks was approved Wednesday by federal regulators.

President Bill Clinton's administration and other supporters of the new rules conceded no one will be completely happy but urged Congress to give the new approach a chance to work.

"These reforms help fulfill two important promises I made to the American people: to increase access to credit for all Americans and to decrease meaningless federal regulatory burdens," Clinton said in a statement. "Now is the time to end uncertainty and get on with business, not to tinker with the statute."

Many Republicans in Congress have proposed drastically revamping financial anti-discrimination laws.

The revisions approved Wednesday result from an overhaul Clinton ordered two years ago in the Community Reinvestment Act of 1977.

In one key change, regulators scrapped 12 largely subjective criteria and replaced them with three broad categories to determine whether lenders are meeting terms of the law.

"This whole regulatory approach is less about confrontation than about partnership," said Comptroller of the Currency Eugene Ludwig.

The Federal Reserve, the Office of Comptroller of the Currency and the Office of Thrift Supervision approved the new rules Wednesday. The Federal Deposit Insurance Corp. is expected to adopt them Monday.

Officials said the regulations - without sacrificing the needs of underserved communities - will help meet complaints by banks and other lenders that they are swamped with paperwork.

The new rules dropped a proposal that lenders be required to list the race and gender of all small-business borrowers.

Instead, only larger banks will compile information on loans made to specific areas using census data as a guide to whether low- and moderate-income areas are getting equal treatment. …