Regulators Pledge To Fight Attack On Fair Lending Rules

The Clinton administration and federal banking regulators urged senators Tuesday to refrain from rolling back fair lending rules in the process of relieving bankers of unnecessary paperwork.

Treasury Secretary Robert Rubin told small business owners the administration would fight efforts by Republicans in Congress to weaken the Community Reinvestment Act of 1977, which requires banks to lend in poor neighborhoods.

Meanwhile, federal regulators delivered a similar message to the Senate Banking subcommittee on financial institutions and regulatory relief. Less than two weeks ago, the regulators issued a top-to-bottom rewrite of the regulations governing the 18-year-old anti-redlining law.

“We would ask the Congress to give the new regulations a chance to prove they can work,” said Ricki Helfer, chairwoman of the Federal Deposit Insurance Corp.

Senate Banking Committee Chairman Alfonse D’Amato, R-N.Y., seemed amenable, saying he did not want the controversy to delay passage of broader regulatory relief legislation.

“I’m going to put aside the question of CRA (the Community Reinvestment Act) because there is so much in this bill that we can agree upon and … pass,” he said.

The bill would make three changes that critics say would exempt 90 percent of the nation’s banks from fair lending rules.

It would exempt all banks with assets of $250 million and less. It would protect from challenge by community groups any bank receiving at least a satisfactory lending rating in its last examination.

And it would eliminate regulatory review of routine branch openings and bank mergers.