From: Andrea Hansen [mailto:andreah@couleecap.org]
Sent: Friday, September 17, 2004 9:25 AM
To: Comments
Subject: Community Reinvestment Act proposal for change
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429
September 17, 2004
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a board member of Fairness In Rural Lending, I
am requesting that the FDIC withdraw its proposal to change the
Community Reinvestment
Act regulations for mid-sized banks. The FDIC proposal will especially
harm the more rural parts of the United States like the state of
Wisconsin, where
there are already fewer banks that are covered by the "large
bank" regulations of CRA.
The difference between how "small" banks and "large" banks
are currently reviewed for CRA purposes is that the large banks
have a service test and investment test in addition to a lending
test.
The investment test is an important tool for increasing the amount
of
affordable housing and community development investments in our
communities because the banks that are subject to the large bank
test feel more
need to work harder to support affordable housing and make
the kinds of investments that help low and moderate income people.
Currently in Wisconsin there are approximately 310
financial institutions covered by CRA. With the current $250 million
threshold, 64 institutions
are considered large banks while the other 246 are small banks.
The Office of Thrift Supervision (OTS) recent decision
to raise the threshold for thrifts to $1 billion removed four of
the 64 institutions from the large bank test, but if the FDIC follows
suit another 25 institutions would be shifted from the large bank
to the small bank category and there would be just 35 "large
banks" left in Wisconsin. Some rural counties would either no
longer have any offices of a "large bank" located within
them or would be reduced to having just one large bank.
The proposal by the FDIC to allow banks between $250
million and $1 billion in assets to pick and choose which types
of activities
they do to meet a new community development test will prove to
provide little value to the intended beneficiaries of the Community
Reinvestment
Act, the low and moderate income people of our communities. In
rural areas this is particularly true because the FDIC's proposes
that "'community
development' activity could benefit
either low- and moderate-income individuals or individuals who reside
in rural areas." Creating such a broad definition of community
development, which could easily be interpreted to mean that loaning
money to a Wal-Mart store opened in a rural area is "community
development," will make the Community Reinvestment Act virtually
meaningless in rural communities.
I urge the FDIC to listen to the voices of National Community Reinvestment
Coalition members and withdraw this proposal and then begin to more
rigorously enforce the Community Reinvestment Act in
rural areas. Too many of the mid-sized banks, which are so important
for our rural economy, are getting by with doing very little community
development service and investment in our communities. We
need you to do a better job enforcing the Community Reinvestment
Act.
Sincerely,
Andrea G. Hansen, Director
Community & Family Development Department