Federal Deposit
Insurance Corporation

2550 West North Avenue
Chicago, Illinois 60647

September 16, 2004

Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., N.W.
Washington D.C., 20429

Re: RIN number 3064–AC50

Dear Secretary Feldman:

I am writing from Bickerdike Redevelopment Corp. to comment on the Federal Deposit Insurance Corporation's (FDIC) proposed changes to their regulation of the Community Reinvestment Act. This proposal would change the definition of institutions considered "small" for CRA purposes from. any institution with less that $250 million in assets and not part of a holding company with over $1 billion in assets to include all institutions with less than $1 billion in assets regardless of holding company size. Additionally, the FDIC proposal would add a community development criterion for institutions between $250 million and $1 billion in assets and amend the definition of "community development" to include a rural development component.

We are deeply concerned about the FDIC's proposal for a number of reasons. First, the proposal would shift a significant number of financial institutions currently considered "large" for CRA purposes to "small" status. "Small" banks are subject to streamlined CRA exams that do not consider an institution's level of community development lending, investments, grants, and services to low- and moderate-income communities. These "small" banks would no longer get CRA credit for their investments in affordable housing developments, developing innovative financial services products that reach the unbanked, or expanding their branch networks into underserved communities. Without this incentive, it is far less likely that banks will participate in such activities in low- and moderate-income communities. Additionally, "small" institutions do not report small business lending data despite the fact that they are major small business lenders.

There is a concern that small cities and rural areas predominantly served by these mid-sized institutions will be particularly effected. Second, the community development criterion proposed by the FDIC, for institutions between $250 million and $1 billion that would allow these banks to choose one activity (from community development lending, investments, or services) to be, considered toward their final CRA rating, is vaguely defined and its weight on CRA exams is unclear. Finally, changing the definition of "community development" to include any type of rural development, regardless of its impact on low- and moderate-income (LMI) households or communities would allow banks to get CRA credit for investing in projects that have little benefit for LMI markets.

In Illinois alone, the FDIC's proposal threatens hundreds of millions of dollars in community development lending and investments. This would be a critical blow to community reinvestment state-wide. We urge you to withdraw the proposed changes to the CRA regulation.

Sincerely,
Joy Aruguete, Executive Director