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Marketing is an important part of the Community Reinvestment Act (CRA) program at most banks. Under the proposed revision of the CRA regulations, marketing is going to become even more important. Certainly upon adoption of the final rule (expected now in early April 1995), marketing plans will need to be carefully reviewed.
The Community Reinvestment Act was enacted in 1977 to affirm that financial institutions have the obligation to help meet the credit needs of their entire communities, including low-and moderate-income neighborhoods. The proponents of the legislation were convinced that large parts of urban areas were being denied credit on the basis of geographic location (redlining) because the residents of these neighborhoods were largely minority or were poor. CRA requires the agencies to use their authority to encourage financial institutions to meet their CRA obligations, consistent with safe and sound operation, and to take into account the bank's CRA record in connection with applications for deposit-taking facilities. Further, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 amendment to CRA makes a bank's CRA rating public.
Marketing Is Crucial to Rating
Banks are currently assessed under a twelve assessment factor test. Marketing is crucial to a good rating in several of these factors. For example, the twelve assessment factors are divided into five categories. The second category is Marketing and Types of Credit Extended. Assessment Factor B thereunder is a rating of the extent of marketing and special credit-related programs. There the bank's marketing and advertising programs and programs to inform all segments of the community of the bank's products and services are regularly reviewed. The advertising of credit services is examined for its penetration throughout the community.
Under the examination guidelines, an outstanding bank will use special advertisement media aimed at particular segments of the community. Its advertisements will be designed to stimulate awareness of credit services throughout the entire community. An outstanding bank will mount special programs that reach out to all segments of the community. Additionally, the regulators will review whether there are adequate...