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

DATE: THURSDAY, April 20, 1995                   TAG: 9504210053
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

COMPROMISE LOAN PLAN APPROVED

A compromise plan aimed at expanding loans to needy communities and minorities while easing the paperwork burden on banks was approved as expected Wednesday by federal regulators.

The revisions result from an overhaul President Clinton ordered two years ago of the Community Reinvestment Act of 1977.

In one key change, regulators scrapped 12 largely subjective criteria and replaced them with three broad categories to determine whether lenders are meeting terms of the law.

``This whole regulatory approach is less about confrontation than about partnership,'' said Comptroller of the Currency Eugene Ludwig.

Bruce Hodge, vice president in charge of Community Reinvestment for First Union Corp., said the law adds new reporting requirements and, therefore, means additional expense for financial institutions.

Although he had not seen the final rules, Hodge said early reports suggest that regulators worked out a compromise between what advocacy groups wanted and the opinions that the financial community filed.

The requirement for tracking small business loans, he said, means more recording, a lot of monitoring and data input.

Crestar Bank spokeswoman Brenda Skidmore declined to comment, saying she had not seen the rules. While Crestar would welcome relief from paperwork, Skidmore said, she is more interested in the examination procedures based on that paperwork.

Regulators have said they are more interested in performance than in process, she said, and that is true for Crestar Bank.

Rustam N. Wadia, community investment coordinator for NationsBank in Roanoke, had not seen the report either. But if the rules provide relief from paperwork, Wadia said, the time saved could be used to deliver loans and services in the marketplace.

The Federal Reserve, the Office of Comptroller of the Currency and the Office of Thrift Supervision approved the new rules Wednesday. The Federal Deposit Insurance Corp. is expected to adopt them Monday.

Officials said the regulations - without sacrificing the needs of underserved communities - will help meet complaints by banks and other lenders that they are swamped with paperwork.

The new rules dropped a proposal that lenders be required to list the race and gender of all small-business borrowers.

Staff writer Mag Poff contributed information to this story.

by CNB