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Comptroller Ludwig pledges to put CRA to work.

Comptroller of the Currency Eugene Ludwig proposed regulations December 8 that are expected to boost private investment in low income areas while reducing the regulatory burden on financial institutions.

In releasing the proposed regulations, Ludwig said the regulations will make the Community Reinvestment Act (CRA) work. CRA was enacted 15 years ago to ensure that banks were issuing loans and directing some of their investments toward low and moderate income communities. The law has been viewed as a paper tiger more concerned with gathering documentation than with assessing lending practices of financial institutions.

The proposed rules emphasize performance over documentation. They will replace the current assessment factors for CRA with three evaluation standards or tests:

* a lending test to evaluate direct lending;

* a service test to evaluate the provision of branches accessible to low- and moderate-income areas, and the provision of services that promote credit;

* an investment test would take into account investment in organizations to initiatives that foster community development, small and miniority-owned business development or affordable housing.

The rules will be issued in the Federal Register for public comment during the course of the next 60 days.
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Title Annotation:Comptroller of the Currency Eugene Ludwig, Community Reinvestment Act
Author:Barreto, Julio
Publication:Nation's Cities Weekly
Article Type:Brief Article
Date:Jan 3, 1994
Words:189
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