Federal Deposit
Insurance Corporation

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

Re: RIN 3064-AC95

Dear Mr. Feldman:

I join the National Community Reinvestment Coalition in urging you to drop your proposal to preempt certain state laws in connection with the lending and deposit activities of state-chartered banks. I believe the proposal would strip Pennsylvania of its power to enforce and enact meaningful consumer protections for our citizens.

As we understand it, the proposal would allow FDIC-chartered banks to skirt strong consumer protection laws in states in which they make loans and follow weaker laws of the state in which they are headquartered. If the FDIC enacts this proposal, state-chartered banks will be tempted to place their headquarters in states with weak laws and then "export" these laws to other states in which they make loans. The end result would be a regulatory race to the bottom and the stripping away of states rights, leaving consumers without strong protections against predatory lenders.

One strong consumer protection that is in place and, I think, unique to Pennsylvania, is the Homeowners Emergency Mortgage Assistance Program.  HEMAP requires lenders to provide written notice to a delinquent borrower that they may be eligible for a special loan to avoid foreclosure.  This notice also forestalls the foreclosure process to allow for application to the program.  It would be unfortunate if such a program were rendered meaningless by the FDIC pre-emption.

Another area of special concern is predatory lending.  As you may know, a recent Federal Reserve study of the new 2004 HMDA data confirmed two reports by NCRC that found that minorities continue to pay more for loans as they are more likely to receive high cost loans than their white counterparts. The data indicate that such practices vary from state to state.  It is, therefore, imperative that states have the authority to clamp down on predatory practices.  

Also, given that federal regulators have recently chipped away at important consumer protections, now is not the time to negate special protections offered by states.

I strongly urge you to drop your proposal and to remind state-chartered banks that they have a moral and civic responsibility to respect the will and the rights of the states to protect its citizens. Thank you for your consideration of my comments.

 
Sincerely,

Alan L. Jennings
Executive Director
Community Action Committee of the Lehigh Valley