These standards have been in effect for small banks since 1996. As you know, while consideration of qualified investment and services may be considered in a small bank examination, they must be considered in the CRA examination of large retail banks. Of the three, the lending test is the most important it is given the most weight. The test that generates the most questions, however, is the investment test. These areas often lack capital.
Capital is necessary for safe and sound lending.
Capital provides borrower equity and other re-payment guarantees. In order to lend safely, banks sometimes need to replace this missing capital. Bank investments, and other support, enable these organizations to help banks meet credit needs. This is why we have an investment test. I suspect many of you have heard rumors to the contrary.