Federal Deposit
Insurance Corporation

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW 20429
RE: RIN 3064-AC50

Dear Mr. Feldman:

We are a concerned family opposed to watering down CRA (Community Reinvestment Act) requirements for mid-sized banks. CRA is vital for increasing homeownership and economic development in lower-income communities. However, your proposed changes will halt the progress that has been made and is contrary to CRA's statutory mandate.

Banks with over $250 million in assets must be tested on their number of loans, investments, and services to low- and moderate-income communities. But your proposal would eliminate the investment and service requirements for all banks with under $1 billion in assets. This will result in significantly fewer loans and investments in affordable rental housing, health clinics, community centers, and economic development projects.

Your proposal also means that CRA examiners will no longer scrutinize how many branches banks maintain in low- and moderate-income communities and how many checking and savings accounts banks offer to low- and moderate-income communities. In the last few years, the number of payday lenders and other usurious lenders have soared. It is precisely the wrong time to dramatically lessen banks' CRA requirements to provide affordable products to low- and moderate-income customers.

In the watered-down exam, you would allow mid-sized banks to choose which community development activities they will undertake. Right now, these banks must make community development loans, investments, and services. Your proposed test allows banks to choose only one of the three activities. The result will be less community development activity.

You also propose that community development activities in rural areas can benefit any group of individuals instead of only low- and moderate-income individuals. But this will allow banks to focus on affluent residents of rural areas rather than the lower income consumers CRA targets. Finally, you would also eliminate publicly available data on the small business lending of mid-sized banks. Without data, community groups and citizens cannot hold banks accountable for lending to small businesses in their neighborhoods.

In the state we call home, the impacts are severe. More than 86 percent or 37 of the 43 FDIC-supervised banks in the state of Maryland have assets less than $1 billion. Therefore only 6 or 14 percent of FDIC-supervised banks would now have the comprehensive large bank exam under your proposed changes. Fifteen banks with assets between $250 and $1 billion will shift from the large bank exam to the cursory small bank exam. Since these banks have more than $7 billion in assets, the loss in resources for communty development activity in Maryland will be sudden and large in magnitude. Banks with assets between $250 million and $1 billion have 29 percent of all assets of FDIC-supervised banks in Maryland. In one shot, you have decreased the number of assets devoted to community reinvestment by almost one third.

We are in a jobless recovery or more accurately, a recession. Welfare reform has compelled hundreds of thousands of people to seek work with much less support; these citizens titter precariously on the edge of grinding poverty. The federal government has recently announced increases in the number of Americans in poverty and without health insurance. A significant weakening of CRA will only compound the social and economic deprivation. In contrast, an astute anti-poverty program would consist of strengthening CRA. The Federal Reserve Board and Harvard University have conducted studies demonstrating that CRA is profitable for banks and has increased lending to low- and moderate-income families and communities. CRA is a win-win proposition. It is astounding that Bush appointed regulators are seeking to weaken an effective economic policy tool. The theme of the Republican convention, "the ownership society," rings hallow when major policymakers in that party act contrary to their emphasis on homeownership and small business ownership.

Lenders have an affirmative and continuing obligation to meet community needs under CRA. Technological advances such as the internet and more sophisticated underwriting have equipped lenders to be more effective in expanding access to credit to low- and moderate-income communities. With increased capacities, lenders could efficiently meet the requirements of a stronger CRA that would automatically examine all affiliates of lenders and would expand assessment areas to cover the vast majority of bank loans. Yet, instead of strengthening CRA so that lenders meet their continuing and affirmative obligations to satisfy community needs, you are unjustifiably and dramatically weakening CRA.

CRA is too important to be gutted. Please drop your proposal like the Federal Reserve Board and the Office of the Comptroller of the Currency that recognized its harm to underserved communities.

Sincerely,

Josh Silver and Kathy Bakich
6503 Marjory Lane
Bethesda MD, 20817