Katrina Creates CRA Opportunities

The federal banking regulators need to be more consistent in allocating Community Reinvestment Act credit to depository institutions that are providing assistance to areas and persons impacted by Hurricanes Katrina and Rita, according to one community development group.

"The agencies are inconsistent on who will get credit for what," said Judy Kennedy, president of the National Association of Affordable Housing Lenders.

The banking and thrift agencies recently issued proposed CRA guidance that asserts all banks will receive CRA consideration for their activities in disaster areas.

Separately, the Office of Thrift Supervision has issued a memorandum that allows thrifts to receive CRA credit for their lending, investment and service activities to revitalize or stabilize areas impacted by Katrina and Rita, even though it is outside their CRA assessment area.

"We will also recognize activities that benefit displaced individuals," OTS says in the Dec. 20 memorandum.

"OTS is on the right track," Ms. Kennedy said. However, she is disappointed that the other agencies have not issued similar statements and they are relying on their examiners to determine what disaster relief activities qualify for CRA credit.

NAAHL members include many national and regional banking companies with multiple banking charters. And they are finding that CRA credit is being determined randomly by agency.

NAAHL also is concerned that the proposed CRA guidance is "overly complicated" and could stifle institutions' responses to disasters.

"It is important for the agencies to clarify, once and for all, that all banks will receive CRA credit for providing lending, investment and service activities to revitalize or stabilize the hurricane-stricken areas and to assist evacuees," NAAHL says in a comment letter. "The wide area of devastation and the number of those displaced require strong efforts to help areas and persons in need. Wherever they are located, banks should receive favorable consideration for their assistance."

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