Magazine article American Banker

GOP Rebuffed in Effort to Win Community Loan Funds for Banks

Magazine article American Banker

GOP Rebuffed in Effort to Win Community Loan Funds for Banks

Article excerpt

WASHINGTON -- Republicans in Congress urged the Clinton administration Wednesday to assure commercial banks a role in the proposed community lending program. But they were rebuffed by a Treasury official.

Frank Newman, under secretary of the Treasury for domestic finance, told members of the House Banking Committee that only a limited amount of money will be available for the community development bank program.

Therefore, "it's difficult to propose giving money to Citibank, NationsBank, or Bank of America, which already have very substantial resources," Mr. Newman said.

$382 Million Earmarked

The administration has called for spending $382 million over four years on community development lenders of all kinds. A commercial bank would be eligible for grants only if its primary business was community lending.

"The problem is, in my area there are no" community development financial institutions, said Rep. Alfred A. McCandless, R-Calif.

Rep. Jim Leach, R-lowa, who plans to offer an alternative to the administration's proposal, said he was disappointed that the administration had not incorporated any of the ideas advanced by Republicans,

Meeting CRA Obligations

Mr. Leach would encourage banks to invest in community development banks by offering a "safe harbor" on their Community Reinvestment Act responsibilities.

Mr. Newman said he expects that regulators will decide to give banks and thrifts credit toward meeting CRA responsibilities, but did not say how much. …

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