Magazine article American Banker

NationsBank Pressing for Changes in CRA Enforcement

Magazine article American Banker

NationsBank Pressing for Changes in CRA Enforcement

Article excerpt

ATLANTA -- NationsBank Corp., a leader in low-income banking, is campaigning for major changes in enforcement of the Community, Reinvestment Act.

In an internal employee newsletter, the company wrote that the law "itself raises issues that are detrimental to encouraging the best source of compliance."

Cathy Bessant, who oversees the company's commitment to spend $10 billion over 10 years on community projects, said NationsBank's chief complaint is that bank examiners focus on documentation rather than results.

|Objective Standards' Sought

"Our prime goal is measurable, objective standards," she said.

Bankers have argued for years that CRA requirements are too vague and focus too much on process" at the expense of actual lending.

But if the North Carolina-based giant makes good on its promise to go public with its complaints, it would be the first major bank to come forward with a list of specific recommendations to change the 1977 law.

In the newsletter, Ms. Bessant wrote that regulators' "safety and soundness" standards make banks reluctant to lend in low-income communities despite the fact that "loans there are just as safe as those in other areas."

CRA should be rewritten to set "realistic standards," the newsletter said.

NationsBank also will argue for stronger incentives achieve a top CRA rating -- namely, a |safe harbor' that would shelter banks from regulatory denial, based on CRA challenges, of applications for acquisitions or mergers."

Ms. Bessant said NationsBank executives, including chairman Hugh L. McColl Jr., will push for CRA reform in public speeches and through lobbying.

"We're hoping these ideas will percolate and gestate and one day something may happen in Congress," agreed Mark Leggett, the bank's chief lobbyist on Capitol Hill. But he added that CRA reform trails interstate banking, regulatory relief, and bankruptcy law reform on NationsBank's legislative priority list. …

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