Rule should reduce exams for community banks

Northwestern Financial Review, Oct 4, 1997

The Federal Reserve Board has proposed a policy change which would result in more resources being devoted to regulate banks that frequently violate consumer protection laws. The new policy, which will be phased in during 1998, will result in the separate exams for compliance, the Community Reinvestment Act, and fair lending to be merged into a single exam.

The examination schedule also will be affected by the new policy. For small banks with few consumer law compliance problems, it should mean fewer exams. The Fed said it will review banks with "exemplary" compliance records less frequently. A similar ``risk-focused'' compliance program was adopted by the Office of the Comptroller of the Currency late last year.