FDIC Allows CRA Disaster Credits

Banks across the United States can receive Community Reinvestment Act credit for providing assistance to disaster areas hit by Hurricane Katrina, according to the Federal Deposit Insurance Corp."The regulators will allow banks outside those [disaster] areas to obtain CRA credit for loans and investments," FDIC spokesman David Barr told MortgageWire. FDIC banking regulators recently changed the CRA rules to allow credit for disaster assistance. But it was unclear whether a bank in California could get CRA credit for making a development loan in a flooded low- or moderate-income neighborhood of New Orleans. Now the FDIC has clarified that banks can get credit if they want to reach out of their CRA assessment area and help with the Katrina recovery effort. FDIC officials expect banks to be reasonable, however. "They still have to meet the credit needs of their own communities," Mr. Barr said. "We don't want them to just abandon their own communities to help out disaster areas." The CRA rule change went into effect Sept. 1.