Magazine article American Banker

Fed Should Rank CRA Protests by Seriousness, a Top Official Says

Magazine article American Banker

Fed Should Rank CRA Protests by Seriousness, a Top Official Says

Article excerpt

To speed processing of merger applications, the Federal Reserve should distinguish between serious and marginal Community Reinvestment Act protests, the central bank's inspector general said.

Inspector General Brent Bowen said in a recent report that he found that many CRA protests are minor, not warranting consideration by the Fed board. The Fed should let its 12 reserve banks handle these applications, Mr. Bowen said.

The Fed should let the reserve banks handle applications involving banks with outstanding CRA ratings, protests that raise issues the Fed already has dealt with, complaints based on individual consumer-related issues, and objections without any supporting evidence, he said.

Community activists opposed the idea, saying it would hurt efforts to protect neighborhoods from bank mergers.

"We would have serious concerns about leaving this up to delegated authority," said Allen J. Fishbein, general counsel at the Center for Community Change. "Regulatory bureaucrats would be deciding important issues of public policy. Those kinds of shots should be decided at the board level."

He said the reserve banks are run by the commercial banks in the district, raising questions about how objective the staff could be.

But banking industry advocates said the idea makes sense. "It is appropriate," said Richard Whiting, general counsel of Bankers Roundtable. "History has shown that a large number of comments filed on applications are repetitive of previous comments. …

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