1407 N. Zenith Ave.
Davenport, IA 52804
September 17, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a former legal services attorney, and a civil rights investigator
who encounters on a daily basis low- and moderate-income persons in need
of a wide range of opportunities and services that the well-to-do are
oblivious to, I urge you to not turn a blind eye to those less fortunate
and withdraw your proposed changes to the Community Reinvestment Act (CRA)
regulations. CRA has been instrumental in increasing homeownership,
boosting economic development, and expanding small businesses in the
nation’s minority, immigrant, and low- and moderate-income communities.
Your proposed changes are contrary to the CRA statute and Congress’
intent because they will slow down, if not halt, the progress made in
community reinvestment.
Under the current CRA regulations, banks with assets of at least $250
million are rated by performance evaluations that scrutinize their level
of lending, investing and services to low- and moderate-income
communities. The proposed changes will eliminate the investment and
service parts of the CRA exam for state-chartered banks with assets
between $250 million and $1 billion. In place of the investment and
service parts of the CRA exam, the FDIC proposes to add a community
development criterion. The community development criterion would require
banks to offer community development loans, investments and services.
The community development criterion would be seriously deficient as a
replacement for the investment and services tests. Mid-sized banks with
assets between $250 million and $1 billion would only have to engage in
one of three activities: community development lending, investing or
services. Currently, mid-sized banks must engage in all three
activities. Under your proposal, a mid-sized bank could now choose a
community development activity that is easiest for the bank instead of
providing an array of comprehensive community development activities
needed by low- and moderate-income communities. THIS IS SIMPLY NOT
ENOUGH.
Here in the state of Iowa, ALL BUT ONE of the 297 banks regulated by
the FDIC would be exempt from the stricter “three-part test.” The effect
of removing that many banks from the need to engage in all three levels
of lending and services will be devastating to Iowa’s rural areas as
well as its larger urban communities.
The consequences for low- and moderate-income communities is that CRA
examiners will no longer expect mid-size banks to maintain and/or build
bank branches in their communities. Mid-sized banks will no longer make
sustained efforts to provide affordable banking services, and checking
and savings accounts to consumers with modest income. Mid-size banks
will also not respond to the needs for the growing demand for services
needed by immigrants which is a growing population in Iowa.
In summary, 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. Two other regulatory agencies, the Federal Reserve
Board and the Office of the Comptroller of the Currency, did not embark
upon the path you are taking because they recognized the harm it would
cause.
CRA is too vital to the production and maintenance of affordable
housing to be gutted by regulatory fiat and neglect. Please reverse your
proposed course of action, or we will ask Congress to halt your efforts
before the damage is done.
Sincerely,
Keirsten Anderson
