AL 98-16
Subject: Accuracy of Community Reinvestment Act Data in Large
Banks
Date: October 20, 1998

TO:  Chief Executive Officers and Compliance Officers of all
     National Banks, Department and Division Heads, and all
     Examining Personnel

Accurate home mortgage, community development, and small business
data are essential for determining a bank's compliance with the
Community Reinvestment Act (CRA).  Erroneous data may  mislead users
of bank small business, community development, and home mortgage
data including community organizations, community development
advocates, government agencies, bank personnel, and examiners.  Data
errors also affect an examiner's ability to evaluate a bank's CRA
performance appropriately and accurately.  They also increase the
burden on bank personnel during examinations and increase OCC
examination time when data must be corrected during an examination. 

While performing large bank CRA  examinations, OCC examiners have
found many errors in the collecting and reporting of CRA lending
data prescribed under 12 CFR 25.42. [note:"Small banks," as defined
in 12 CFR 25.12(t), are not subject to data collection and reporting
unless they elect to be evaluated under the lending, service and
investment test.  See 12 CFR 25.42(f). ] Additionally, examiners
have been asked to consider as qualified investments activities that
do not meet the definition of 12 CFR 25.12(s) and community
development loans and service activities that do not meet the
definitions under 12 CFR 25.12(I) and (j). 

Bank management should evaluate their institution's processes for
collecting, verifying, and reporting CRA data.  They should also
review how their employees are trained in the CRA data collection
requirements.  Banks should have effective internal controls for
collecting the data, along with audit procedures to regularly test
the internal controls and data accuracy.  Data errors should be
corrected before submitting data to the Federal Financial
Institutions Examination Council or providing data to examiners.  

Some common errors that OCC examiners have found include:

-    Reporting renewals of small business loans as originations;
     [note:See OCC Bulletin 97-42, Interagency Questions and
     Answers, Q5 under Section .42(a) on page 52124 of Federal
     Register, Volume 62, No. 193, dated October 6, 1997.] 

-    Not reporting gross annual revenues, when known, for a business
     receiving a small business loan; 

-    In cases of an increase in a line of credit, reporting the
     total amount of the line of credit rather than the amount of
     the increase; [note:See OCC Bulletin 97-42, Interagency
     Questions and Answers, Q3 under Section .42 on page 52124 of
     Federal Register, Volume 62, No. 193, dated October 6, 1997. ] 

-    Reporting loans that do not meet the definition of community
     development in 12 CFR 25.12(h);

-    Reporting loans as both a small business loan and a community
     development loan [note: Loans that meet the definition of small
     business loans must be reported in that category regardless of
     their  purpose.]

OCC examiners will review national banks' processes for collecting,
reporting, and verifying the integrity of CRA data during future
compliance or CRA examinations.  Results of the OCC's review will
allow examiners to set examination scopes and time frames for the
examination.  Errors in data that affect an examiner's ability to
evaluate a bank's CRA performance accurately and appropriately  will
not be used in examinations.  The resubmission of reportable data
may also be required and other supervisory actions may be taken.

If you have any questions concerning CRA data collection, please
contact the assistant deputy comptroller or the examiner-in-charge
assigned to your bank.  If you have questions about this advisory
letter, please contact the Community and Consumer Policy Department
at (202) 874-4446.


                                                                
Stephen M. Cross 
Deputy Comptroller
Community and Consumer Policy