Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 27, 1991                   TAG: 9103270534
SECTION: VIRGINIA                    PAGE: A/4   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BANKS RATED SATISFACTORY IN LOANS TO POOR

But community activists contend that the statistics, compiled by a private economist from regulators' records, reveal more about examiners' lax evaluation methods than about banks' actual performance.

A little-known provision of the 1989 savings and loan bailout law required regulators, starting last July, to make banks' community lending performance public. Until then, the ratings of individual banks were considered a private matter between the regulators and the institutions.

The provision amended the Community Reinvestment Act of 1977, which was aimed at discouraging banks from red-lining - refusing to lend to - people and businesses in low-income neighborhoods.

Community activists who backed the amendment, offered by Democratic Reps. Henry Gonzalez of Texas and Joseph Kennedy of Massachusetts, said making the ratings public would encourage regulators to be tougher.

Since the change, examiners have evaluated about 1,700 of the nation's 12,800 banks. Figures released Tuesday by Kenneth Thomas, a Miami-based consultant who helps banks improve their community lending record, gave 89 percent of the banks a satisfactory or better rating.

Thomas' report, based on statistics compiled by the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., showed that 8 percent received a rating of "outstanding" and 80.7 percent were judged "satisfactory."

An additional 10.8 percent were categorized as "needs improvement" and only 0.5 percent were in "substantial noncompliance."

"The high ratings indicate banks are doing a good job in meeting the credit needs of their community," said Virginia Stafford of the American Bankers Association of America.

However, community activist Chris Lewis said, "Obviously the regulators' ratings need improvement."

"We have demonstrable credit problems in low- and moderate-income neighborhoods across the country. The study indicates there are still great gaps in the enforcement" of the act, said Lewis, legislative director of the Association of Community Organizations for Reform Now.