CALIFORNIA LEGISLATURE
Mr. Robert E. Feldman,
Executive Secretary
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429
Attention: Comments/Legal ESS
RE: RIN 3064-AC50
Dear Mr. Feldman:
I am strongly opposed to the Federal Deposit Insurance Corporation's
(FDIC) proposal to raise to $1 billion the threshold for assets at which
financial institutions will be subject to a full examination for
compliance with the Community Reinvestment Act (CRA).
The CRA is intended to encourage financial institutions to help meet
the credit needs of their communities. This proposal would exempt banks
with assets between $250 million and $1 billion from the Service and
Investment tests of the CRA — in effect eliminating regulations for 95.7
percent of the state-chartered banks you monitor.
As and elected representative of the south Los Angeles community for
over a dozen years, first as a City Councilman and now as a state
Assembly member where I Chair the Committee on Jobs, Economic
Development, and the Economy, I recognize the significant role banks
play in boosting economic and community development in moderate- to
low-income areas. Community banks have the opportunity to revitalize
their communities by offering affordable financial services, enhancing
lending, improving access to capital by consumers, and working to
provide affordable housing.
Should. the proposal be approved, banks will no longer be required to
invest in economic and community development activities. This proposal
is patently adverse to my understanding of the CRA's intent - that banks
should serve all income groups in the communities from which they draw
funds. Moreover, the current regulations do not hamper banks' earnings —
the law is clear that an institution's CRA activities should be
undertaken in a safe and sound manner. Financial institutions have
proven they can still turn a profit by providing financing and services
to underserved communities. Absent the regulatory requirements of the
CRA, banks will neglect underserved communities in favor of what they
perceive to be more lucrative opportunities.
Finally, the proposal would eliminate publicly accessible data on
small business lending of mid-sized banks. Small businesses are
frequently the engines of job creation and economic revitalization in
communities with chronically high rates of unemployment. Small business
owners are reliant on the services and convenience of financial
institutions that understand and are committed to the neighborhoods in
which they operate. Without the proper data, public officials, community
groups and citizens would be unable to hold their financial institutions
accountable for their lending practices.
I strongly urge the FDIC to rescind these proposed changes to the CRA
regulations and renew its commitment to the goal of ensuring access to
financial capital and services for low- and moderate-income communities.
With hope,
MARK RIDLEY-THOMAS, Chair
Assembly Committee on Jobs, Economic Development and the Economy
State Capitol,
Sacramento, CA
