CITY OF CHICAGO DEPARTMENT OF HOUSING
September 15, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550
17th Street NW 20429
RE: RIN3064-AC50
Dear Mr. Feldman:
On behalf of the City of Chicago, I am writing to urge you to
withdraw the proposed changes to the FDIC's regulation of the Community
Reinvestment Act (CRA). CRA has been instrumental in increasing access
to homeownership and boosting economic development in Chicago. We are
concerned that FDIC's proposed changes may halt progress in our efforts
to develop and revitalize Chicago's communities.
FDIC's proposal would, for banks it regulates, change the definition
of institutions considered "small" for CRA purposes from any institution
with less than $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.
The proposed changes will eliminate the investment and service parts
of the CRA exam for state charted banks with assets between $250 million
and $1 billion. If approved, over 97 percent of all banks in Illinois
would be subject to a watered-down CRA exam. The proposed change would
affect 70 banks in Illinois.
In place of the investment and service parts of the CRA exam, the
FDIC proposes to add a community development criterion under which
mid-size banks would have to engage in only one of three activities:
community development loans, investments, or services. In addition, the
FDIC proposes to allow banks to receive CRA credit for activities in
areas that are not targeted to the low and moderate income populations
that CRA was intended to help.
The proposed community development criterion will result in
significantly fewer loans and investments in affordable rental housing,
Low Income Housing Tax Credits, community service facilities, and
economic development projects. It will be too easy for a mid-size bank
to demonstrate compliance with a community development criterion by
spreading a few grants or sponsoring a few homeownership fairs rather
than engaging in a comprehensive effort to provide community development
loans, investments, and services.
We do not believe that the regulatory burden for mid-sized financial
institutions is sufficient to justify the potential loss of essential
development resources for low and moderate income communities
nationwide. Furthermore, applying the streamlined small bank exam to
mid-sized institutions threatens CRA's statutory purpose of the safe and
sound provision of credit and deposit services.
We thank you for considering our comments, and we urge the FDIC to
withdraw the proposed changes to its CRA regulation.
Sincerely,
John G. Markowski, Commissioner
Department of Housing
