The Timing and Persistence of CRA Compliance Ratings |
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Authors: | Drew Dahl Douglas D. Evanoff Michael F. Spivey |
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Affiliation: | (1) Utah State University, USA;(2) Federal Reserve Bank of Chicago, USA;(3) Clemson University, USA |
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Abstract: | We evaluate supervisory practices in enforcing the Community Reinvestment Act (CRA) by examining whether or not supervisors consider observable, bank-specific characteristics in (1) scheduling CRA compliance examinations and (2) determining whether, and for how long, a given CRA rating persists. Failure to confirm such a relationship would be consistent with criticism that the evaluation criteria are so vague that supervisors can essentially assign any rating they want for compliance purposes. Analysis of a sample of several thousand commercial banks, observed over a relatively stable regulatory regime, indicates that both examination scheduling and the persistence of examination ratings are associated with residential loan levels, a presumed cornerstone of the CRA, as well as other financial, regulatory and market factors. We conclude that CRA enforcement during this period reflected, at least in part, objective evaluation criteria. |
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Keywords: | Community Reinvestment Act bank regulation bank supervision fair lending. |
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