House panel votes to ease community-lending law


WASHINGTON -- The House of Representatives Banking Committee approved a measure yesterday that would eliminate most enforcement of the federal law that requires banks to lend in poor neighborhoods as well as rich ones.

Conservative Republicans forced through the amendment to a bank deregulation bill on a party-line vote of 25-17. They argued that the measure would reduce the regulatory burden on banks by making enforcement procedures more efficient.

Rep. Bill McCollum, a conservative Republican from Florida, introduced the amendment. It would end the ability of community activists to block banks with poor community-lending records from obtaining regulatory approval for mergers, acquisitions and other transactions.

Instead, a bank's community-lending record would be included in regulators' overall review of the quality of a bank's management every 18 months or so.

That review is important mainly for determining whether ailing banks are put on special lists for close observation and for possible closure by regulators.

But liberal Democrats, community activists and the Clinton administration strongly disagreed with the House Banking Committee's vote. Treasury Secretary Robert E. Rubin said the bill would effectively negate the law, the Community Reinvestment Act.

"I am strongly opposed to this evisceration of CRA," Mr. Rubin said.

"The banking regulators recently completed a two-year, comprehensive overhaul of the CRA regulations that relieves the burden on banks. We need to give the regulations a chance to work."

The Clinton administration is trying to defend consumers and minorities and score political points by spotlighting the efforts of conservative Republicans to roll back consumer protection and anti-discrimination laws.

Attorney General Janet Reno and Mr. Rubin have issued several statements this month in response to the Republican initiatives.

Critics have focused in particular on a provision adopted in subcommittee that would bar the Justice Department from relying on statistical patterns of discrimination, forcing it to rely instead on cases of demonstrable bias against specific individuals.

Rep. Jim Leach, the moderate Republican from Iowa who is the Banking Committee chairman, said last night that some of the bill's provisions, including the amendment on statistics, have "gone too far" and may be revised or deleted as the full committee continues its work.

Although House Democrats are still trying to block the bill in committee, Mr. Leach said his committee was likely to complete action on the bill by tonight.

The bill faces an uncertain fate on the House floor because the Republican leadership has decided to pair it with a controversial bill that would repeal the regulations that have separated the nation's banking and securities industries for 62 years.

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