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FDIC Federal Register Citations

MERAMEC VALLEY BANK

April 1, 2004

Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 200551
Re: Docket No. R-1181
regs.comments@federalreserve.gov

Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
comments@fdic.gov

Re: Community Reinvestment Act regulations

As a community bank, Meramec Valley Bank strongly endorses the federal bank regulators’ proposal to increase the asset size, from $250 million to $500 million, of those banks eligible for the small-bank, streamlined, Community Reinvestment Act (CRA) examination process, and to eliminate the holding company size limit. This proposal will greatly reduce regulator burden.

The small bank CRA examination process was an excellent innovation. As community bankers, we applaud the agencies for recognizing that it is time to expand this regulatory burden reduction benefit to larger community banks, and we encourage the agencies in your efforts to find other areas in which similar benefits may also be structured. At this critical time for the United States economy, we must allow more community banks to focus on what they do best — fueling America’s local economies. When a bank must comply with the requirements of the large bank CRA evaluation process, the costs and burdens increase dramatically. This means that the resources devoted to this and other areas of regulatory compliance are resources not available for meeting the credit needs of our community.

Adjusting the asset size limit also more accurately reflects the significant changes and consolidation which have occurred within the banking industry over the past ten years, and which continue today. To be fair, banks should be evaluated against their peers, not against banks hundreds of times their size. And, while the proposed increase is a good start, we encourage consideration of further increases of asset size eligibility to $1 billion or more.

Ironically, community activists seem oblivious to the costs and burdens of regulatory compliance. If community groups want to keep the local banks in the community, where customers have better access to decision-makers, they must recognize that regulatory burdens are strangling the smaller institutions, forcing them to consider selling to larger institutions that can better manage the burdens.

Increasing the size of banks eligible for the small-bank, streamlined, CRA examination does not relieve banks of their CRA responsibilities. Since the survival of many community banks is closely intertwined with the success and viability of their communities, the increase will merely eliminate some of the more burdensome requirements.

In summary, we believe that increasing the asset size of banks eligible for the small-bank CRA process is an important first step in reducing regulatory burden. We also support eliminating the separate holding company qualification for the streamlined examination, since it places smaller community banks that are part of a larger holding company at a disadvantage to their peers. While community banks still must comply with the general requirements of the CRA, this change will eliminate some of the most problematic elements of the current regulation from community banks that are drowning in red tape. We also urge the agencies to continue to look for other ways in which regulatory burden might be reduced.

Very truly yours,

MERAMEC VALLEY BANK

Donna L. Bymes
Assistant Vice President, Compliance Officer

Last Updated 04/06/2004 regs@fdic.gov

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