WASHINGTON -- Federal regulators, bowing to intense opposition from bankers and Republicans in control of Congress, have dropped a proposal to require lenders to collect and report information on the race and gender of their small-business borrowers.
The decision was disclosed yesterday as the four banking agencies prepared for final adoption today of a thorough overhaul of regulations aimed at encouraging banks and savings and loan institutions to make more loans in low-income and moderate-income areas.
Under the 1977 Community Reinvestment Act, banks are already required to provide a detailed breakdown on home mortgages. But they vehemently complained that demanding similar information on their loans to small businesses and farms would mean endless red tape and accomplish little.
Supporters of the Community Reinvestment Act hope that regulators, by making the rules less burdensome, will ease demands from Republican lawmakers to curb their enforcement powers even more.
The formal announcement on the overhaul of regulations is to be made jointly today by the Federal Reserve Board, the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.
Bankers were generally pleased with the new rules, but they did not want to boast publicly after being privately notified of what they would contain.
"It is definitely an improvement over earlier proposals," particularly for banks smaller than $250 million, said Edward L. Yingling, executive director for government relations at the American Bankers Association. He called the publication of race and gender information "totally unworkable."
Banks still will be obliged to collect data on lending to small businesses by census tract. But the data will be reported only in the aggregate, not on the loan-by-loan basis now required for home mortgages.
Most provisions of the final rules are expected to take effect Jan. 1, 1996.