Federal Deposit
Insurance Corporation

National Community Capital

From: Cheryl Neas [mailto:Cheryln@communitycapital.org]
Sent: Tuesday, December 13, 2005 9:28 AM
To: Comments
Subject: RIN 3064-AC95

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

RE: RIN 3064-AC95

December 13, 2005

Dear Mr. Feldman:

National Community Capital appreciates the opportunity to comment on the Federal Deposit Insurance Corporation's (FDIC) Notice of Proposed Rulemaking on Interstate Banking.

On behalf of National Community Capital's 170 Member CDFIs, the hundreds of thousands of borrowers they have assisted, and the tens of thousands of investors who provide our capital, I urge you in the strongest possible terms to withdraw the proposed rule. Adoption of this rule would amount to preemption of state banking law, undermining Congressional intent for the dual banking system and rolling back gains in consumer protections and anti-predatory lending initiatives.

FDIC Authority for Rulemaking

As commenters including the Coalition for Responsible Lending (CRL) and the National Community Reinvestment Coalition (NCRC) pointed out in response to the petition for this rulemaking, the FDIC lacks direction from Congress to engage in this preemptive rulemaking. The rule purports to strive for "uniformity" between state and federal banking systems, but Congress has made no such call for uniformity. It is Congress, not the FDIC, that should make that determination.

Congress has repeatedly expressed its intent to continue a balance of state and federal control of banking activities, as the CRL extensively documented in its letter of May 16, 2005. In particular, Congress has generally expressed a position that federal law is a "floor" and not a uniform standard, and that states are free to enact more stringent consumer protections. The FDIC's proposal contradicts that sentiment.

Preemption Would Harm Consumers

Despite federal legislative and regulatory efforts, predatory lending continues to be a serious problem in our nation's communities. For example, a recent Federal Reserve study of 2004 Home Mortgage Disclosure Act (HMDA) data found that minority borrowers continue to pay more for loans and are more likely to receive high-cost loans than white borrowers.

Legislators have attacked and enacted predatory lending protections primarily at the state level. And their efforts have worked: the Center for Responsible Lending showed that the pioneering North Carolina anti-predatory-lending law saved consumers more than $100 million without significantly altering access to credit. Other states have used North Carolina's model to curtail abusive lending and protect their consumers. The FDIC's proposal threatens to reverse these successes by allowing banks headquartered in other states to exempt themselves from these laws when doing business with residents of states with strong protections. The proposal would also exacerbate the problem of payday lenders working with unscrupulous banks to evade state usury laws (the so-called "Rent-a-charter" practice).

Conclusion

The Community Reinvestment Act regulations issued by the FDIC and other regulators earlier this year reduced the CRA obligations of many banks. The current proposal would further erode banks' responsibilities to their communities by permitting FDIC-regulated institutions to skirt state consumer protection laws. Now is not the time to weaken laws for state-chartered banks To protect the integrity of the dual banking system and provide appropriate protections against abusive lending, the FDIC must withdraw this proposal.

Thank you for your consideration. Please do not hesitate to contact me at 215.320.4304 or markp@communitycapital.org if you have questions or would like to further discuss these comments.

Sincerely,

Mark Pinsky
President and CEO