CRA Evaluations Out from OCC: More Grade Inflation

The OCC announced results on 20 CRA evaluations today. Not surprisingly, 19 of the 20 banks got a “satisfactory” and the other received an outstanding.

It has been our feeling for some time that the CRA exams are a charade.  They are supposed to uncover a lack of performance in low or moderate-income census tracts. In any year, more than 2,000 banks are evaluated. In 2008, 2,051 institutions were evaluated.  Twenty-nine were deemed “needs to improve,” and four received a “substantial non-compliance.  That won’t lead to much change, because it doesn’t take a rocket scientist to realize that the regulators are avoiding conflict.  In fact, the market appears to be a stronger enforcement agent – the two largest lenders to get anything below satisfactory were Countrywide and AIG.

This cycle’s outstanding score went to Ephrata National Bank.  (Ticker – ENBP) Here is the pdf of the exam.  Ephrata (more…)