05/08/1991 Meeting - Laserfiche WebLink

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agencies to evaluate CRA performance. The results of these examination are considered when an institution seeks approval for expansion and acquisition plans. Mr. Sullivan noted that the overall effectiveness and enforcement of CRA has been below expectations. However, recent changes in CRA have provid- ed a simplified rating system and public disclosure of examination results, resulting in renewed interest in CRA as a method of encouraging community- wide lending and reinvestment. Mr. Sullivan reviewed the performance categories and assessment factors for CRA which are included in the appendix of the report entitled "Increasing Community Reinvestment: A Practical Approach" included in the council's agenda packet. He said that the institution's overall performance rating is based on a review of the following areas: 1) Efforts to ascertain community credit needs; 2) marketing and types of credit extended; 3) geographic distribution and record of opening and closing offices; 4) discrimination and other illegal practices; and 5) community development. Mr. Sullivan provided a brief overview of the types of activities in which institutions could become involved to enhance their performance rating. These activities include, but are not limited to, participating in govern- ment-sponsored loan guarantee programs; demonstrating an active involvement in community credit issues; and participating and investing in community development projects and programs designed to enhance borrowing capacity. ~ Mr. Sullivan briefly described activities of financial institutions in other areas used to improve their CRA ratings. He said that banks and financial institutions have become involved in development corporations, involving a mix of public, private, and non-profit institutions. In addition, some intu- itions have become involved in bank-sponsored loan consortia which provide the advantages of pooled resources and shared risks among institutions. Also, communities have instituted CRA programs such as lender commitment programs and research and intervention efforts. e e Mr. Sullivan said that one way to acknowledge an institution that makes a good effort toward community reinvestment is by placing a letter in an insti- tution's public file. This file is reviewed by the Federal government in its investigation of CRA compliance. Mr. Sullivan noted that Pittsburg, Pennsylvania, has a unique CRA program that has been very successful in that area. He explained that the City of Pittsburgh has developed its own CRA rating system with stringent criteria and a linked deposit program with the local banks. Mr. Sullivan noted that in formulating such criteria, every effort must be made to ensure the fair- ness of the criteria. Mr. Sullivan briefly described a work plan model for CRA program development. The first step involves the formation of a task team to review community credit needs. The next step is to seek the active participation of community MINUTES--Eugene City Council May 8, 1991 Page 5