Federal Deposit
Insurance Corporation

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

RE: RIN 3064-AC50

Dear Mr. Feldman:

The National Association of Small Business Investment Companies (NASBIC) represents the interests of the Small Business Investment Company industry. The industry is currently represented by over 400 SBICs managing more than $23 billion in capital assets. SBICs invest in U.S. small businesses that meet the size and operational criteria promulgated by the U.S. government.

At this time, NASBIC is opposed to the FDIC proposal to: (a) raise the definition of “small bank” from one with no more than $250 million in assets to one with no more than $1.0 billion in assets; and (b) change the definition of “community development” to encompass rural areas as well as low-and moderate-income areas. The reason for our opposition is that the discussion of the proposed changes published in the August 20, 2004 Federal Register fails to provide a detailed, quantitative impact analysis. Without such an analysis, the proposed change relies on a “percentage of assets covered” justification for the “small bank” definition issue. No substantive justification is offered at all for the proposed change in the “community development” definition. Given that the FDIC has access to all, or almost all, relevant quantitative data related to lending, service, and investment from the banks under its jurisdiction, such important changes should not be adopted without discussion of that quantitative data.

Since the “investment” test was included in the “large bank” CRA examination, banks have become an increasingly important source of capital for SBICs investing within relevant bank assessment areas. In turn, SBICs have played an increasingly important role in the CRA process. For the past several years, more than 25% of all SBIC investments have been made in companies located in low- and moderate-income areas. If that source of capital is put in jeopardy by either or both of the proposed changes, the ability of SBICs to support small businesses in the CRA areas will be diminished—to the detriment of the small businesses, the communities in which they are located, and the workers they employ.

We strongly encourage the FDIC to conduct the quantitative analysis necessary to any estimate of impact that the proposed rule changes will have before adopting or rejecting the same. Thank you for the opportunity to comment on your proposed changes to the FDIC’s CRA regulations. If you have any questions about these comments please do not hesitate to contact us.