INNER CITY PRESS/COMMUNITY ON THE MOVEFrom: Matthew Lee
Sent: Sunday, September 19, 2004 7:40 PM
To: Comments
Subject: Re: RIN 3064-AC50, ICP's Timely opposition to FDIC's (anti-)
CRA proposal
September 19, 2004
Federal Deposit Insurance Corporation
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
and Chairman Powell
550 17th St. NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman, Chairman Powell, and others at the FDIC:
On behalf of Inner City Press / Community on the Move and its members
and affiliates including the Fair Finance Watch (collectively, "ICP"),
this is a timely comment opposing the FDIC's proposed changes to the
Community Reinvestment Act ("CRA") regulations. ICP specifically opposes
raising the threshold for meaningful CRA exams up to $1 billion. This
would, contrary to the statute and to the agencies' precedents, let many
important insured depository institutions off the hook, and would harm
communities and their development and residents.
While ICP is active nationwide, we have recent reviewed which
FDIC-supervised institutions in New York State, with assets from $1
billion down to $500 million and $250 million, would be let off the hook
under your proposal. There are appear to be more than ten such
institutions, ranging from Bank of Utica and Berkshire Bank, each with
nearly $1 billion in assets, through Mitsubishi Trust & Banking and
Interaudi Bank, Woori American Bank and Bank of India, and Chinese
American Bank and Habib American Bank, and Rhinebeck Savings Bank. ICP
has had occasion to comment to the FDIC on weaknesses in the CRA record
of Bank of Berkshire; those comments are incorporated herein by
reference. Please also be aware for the record that the New York Banking
Department has in recent years given rare "Needs to Improve" CRA
ratings to Bank of India Chinese American Bank and
others. Even in cases where, following an adverse rating, a bank has
sought to raise its rating, these are improvements that would not take
place under your proposal. It cannot be said that the banks affected are
uniformly serving the credit needs of communities; the benefit to them
of letting them off the hook does not outweigh the harm you propose to
create to already underserved communities -- including, in New York,
communities still feeling the negative effects, including on access to
credit, of the 9/11 attacks. Your proposal, in short, is irresponsible,
and should be withdrawn.
Nationwide, as calculated by NCRC, of which ICP is a member and on
whose board of directors I serve, the FDIC's proposal would make 879
state-chartered banks with over $392 billion in assets eligible for the
streamlined and cursory exam. In total, 95.7 percent or more than 5,000
of the state-charted banks your agency regulates have less than $1
billion in assets. These 5,000 banks have combined assets of more than
$754 billion. The combined assets of these banks rival that of the
largest banks in the United States, including Bank of America and JP
Morgan Chase. Your proposal will drastically reduce, by hundreds of
billions of dollars, the bank assets available for community development
lending, investing, and services.
The elimination of the service test will also have harmful
consequences for low- and moderate-income communities. CRA examiners
will no longer expect mid-size banks to maintain and/or build bank
branches in low- and moderate-income communities. Mid-size banks will no
longer make sustained efforts to provide affordable banking services,
and checking and savings accounts to consumers with modest incomes.
Mid-size banks will also not respond to the needs for the growing demand
for services needed by immigrants such as low cost remittances overseas.
Banks eligible for the FDIC proposal with assets between $250 million
and $1 billion have 7,860 branches. All banks regulated by the FDIC with
assets under $1 billion have 18,811 branches. Your proposal leaves banks
with thousands of branches "off the hook" for placing any branches in
low- and moderate-income communities.
Another destructive element in your proposal is the elimination of
the small business lending data reporting requirement for mid-size
banks. Mid-size banks with assets between $250 million and $1 billion
will no longer be required to report small business lending by census
tracts or revenue size of the small business borrowers. Without data on
lending to small businesses, it is impossible for the public at large to
hold the mid-size banks accountable for responding to the credit needs
of minority-owned, women-owned, and other small businesses. Data
disclosure has been responsible for increasing access to credit
precisely because disclosure holds banks accountable. Your proposal will
decrease access to credit for small businesses, which is directly
contrary to CRA's goals.
Lastly, to make matters worse, you propose that community development
activities in rural areas can benefit any group of individuals instead
of only low- and moderate-income individuals. Since a significant number
of rural residents are affluent, your proposal threatens to divert
community development activities away from the low- and moderate-income
communities and consumers that CRA targets. Your proposal for rural
America merely exacerbates the harm of your proposed streamlined exam
for mid-size banks. Your streamlined exam will result in much less
community development activity. In rural America, that reduced amount of
community development activity can now earn CRA points if it benefits
affluent consumers and communities. What's left over for low- and
moderate-income rural residents are the crumbs of a shrinking CRA pie of
community development activity.
In sum, your proposal is directly the opposite of CRA's statutory
mandate of imposing a continuing and affirmative obligation to meet
community needs. Your proposal will dramatically reduce community
development lending, investing, and services. You compound the damage of
your proposal in rural areas, which are least able to afford reductions
in credit and capital. You also eliminate critical data on small
business lending. Note -- after preparing this comment for submission by
your September 20, 2004 deadline, ICP learned that you have extended the
comment period through October 20, 2004. ICP may submit further
comments.
CRA is too vital to be gutted by regulatory fiat and neglect. Stop,
we say: stop!
Sincerely,
Matthew Lee, Esq.
Executive Director
