Magazine article American Banker

Nader Pressing to Make Sure Small Banks Remain under CRA

Magazine article American Banker

Nader Pressing to Make Sure Small Banks Remain under CRA

Article excerpt

Consumer activist Ralph Nader blasted proposals to exempt small banks from the Community Reinvestment Act, arguing that many of these institutions do little lending in their communities.

According to a study of June 1994 call report data released Monday by the Nader-founded group Essential Information, 725 community banks put less than 35% of their deposits into loans.

"Clearly, these banks have significantly abandoned their communities and charters and are using federal deposit insurance funds to attract deposits for investments in debt securities and the federal funds market," Mr. Nader said.

Ron Ence, director of legislative affairs for the Independent Bankers Association of America, had another interpretation for the data.

"It's not that they are not anxious to extend credit in their communities," he said of banks with low loan to deposit ratios. "It's just that the demand is not there."

The Nader report comes just days before a key House Banking subcommittee meets to begin work on regulatory relief legislation. The financial institutions panel is scheduled to begin voting on the bill Wednesday.

The average loan-to-deposit ratio for the nation's 9,499 community banks - commercial banks with assets of $250 million or less, by Mr. Nader's yardstick - was 62% in June 1994, according to the study.

Two regulatory relief bills now before Congress would exempt these banks from most or all requirements of the Community Reinvestment Act. …

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