From: Menon, Shashi [mailto:SMenon@Lakefront.org]
Sent: Monday, September 20, 2004 3:25 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50
Subject : Community Reinvestment -- RIN 3064-AC50
I am writing to oppose the Federal Deposit Insurance Corporation (FDIC)
proposed changes to the Community Reinvestment Act (CRA). If the FDIC adopts
these changes, community development activity in low- and moderate-income
neighborhoods and rural areas throughout the Chicago region and the nation
will be threatened.
The FDIC's decision is harmful for a number of reasons. First, the FDIC is
the primary regulator of many state chartered banks that frequently fall
between $250 million and $1 billion in assets. For institutions active in
Illinois in 2003, nearly 40 percent of assets controlled by FDIC-regulated
institutions were held by banks with assets between $250 million and $1
billion. Additionally, the proposed changes would dramatically affect the
presence of FDIC-regulated institutions in Illinois' LMI and rural
communities. An analysis of 2003 banking offices in Illinois urban areas
indicates that increasing the asset size of small banks to $1 billion would
decrease the number of FDIC-regulated banking offices in Illinois LMI census
tracts operated by "large" banks by 63 percent. Deposits in LMI branches
held by "large" FDIC-regulated banks would decline by 68 percent.
FDIC-regulated branches controlling nearly $3.4 billion in LMI deposits, or
over 10 percent of all LMI deposits state-wide, would shift from "large" to
"small" institution status if the asset size of small banks were to increase
to $1 billion. Rural areas will be hard hit as well. Just over 1 percent of
rural Illinois banking offices operated by FDIC-regulated institutions would
be held by "large" banks, a decline of 91.5 percent. This shift would
represent nearly 8 percent of rural deposits state-wide.
The proposed changes would reduce the number of financial institutions
considered "large" for CRA purposes. Our organization fears this will
threaten access to investments, grants, and services for low- and
moderate-income (LMI) communities served by large institutions that would
shift to "small" status under the regulators' proposal. There is a
significant concern that areas predominantly served by mid-sized
institutions will be particularly hard hit. We oppose these changes to the
Community Reinvestment Act and ask that FDIC drop this proposal.
Sincerely
Shashi Menon
Training & Education Manager
Lakefront Supportive Housing
4753 N. Broadway, Suite 632
312 4474606 (phone)
773 506 8655 (fax)