DUKE LAW COMMUNITY ENTERPRISE CLINIC
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal EES
Federal Deposit Insurance Corporation
550 1711 Street, NW,
Washington DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
I am writing to strongly oppose the FDIC's proposal to change the
regulations governing the enforcement of the Community Reinvestment Act
of 1977 ("CRA") by redefining the small bank category to include banks
with assets up to $1 billion in assets.
The CRA has been a critical tool in getting banks to do a better job
of meeting credit needs in low-income and minority communities. Contrary
to early industry concerns, this statute and the regulations adopted by
the four federal supervisory agencies have not resulted in credit
allocation. Instead, they have helped banks to discover and benefit from
markets that they did not previously serve. As lender after lender has
repeatedly stated: CRA has helped banks do well by doing good.
Nonetheless, effective regulation needs to continue if the progress
we are making in rebuilding the economies in low-income and minority
communities is to continue. There is ample data to indicate that market
failures, such as racial discrimination, continue to permeate the
lending industry. Strong and effective regulation is needed to limit the
effect of such market failures. Accordingly, if this change is adopted,
many of the gains consumers have realized, in terms of access to credit,
will be lost.
Banks with assets between $250 million and $1 billion are vital
members of the economy in many communities. Additionally, while they may
not have the same asset base as the largest lending institutions, such
as Citibank, JP Morgan or Bank of America, they are far from small. Not
only do they have the capacity to comply with each of the lending,
service and investment tests, but they are of such substantial size and
economic power, that they should be asked to do so.
The rule proposed by the FDIC would mean that nearly 900 additional
FDIC regulated banks would be required to comply only with the
streamlined CRA exam. These institutions collectively control nearly
$400 billion in assets. Effectively exempting these institutions from
full compliance with the CRA will mean fewer loans, less investment and
a reduction in services in communities that have been historically
discriminated against by financial institutions. Further, other elements
of the proposed rule, such as the elimination of small business data
reporting and the special treatment given to rural community development
activities, regardless of who is targeted, will only exacerbate these
problems.
In short, CRA has been an effective tool for both helping banks
expand their markets and meeting the credit needs of underserved
communities. The current regulations that apply to mid-sized banks are
effective, efficient and are not unduly burdensome. Thus, there is no
need for the adoption of this rule. More importantly, it is imperative
that the current regulatory scheme be continued to assure that the
spirit and intent of the CRA is realized. I urge you to halt
consideration of the proposed changed to the CRA regulations, as they
apply to banks with assets between $250 million and $1 billion.
Thank you for your attention to this matter and please contact me
with any questions.
Andrew H. Foster
Duke Law Community Enterprise Clinic
201 W. Main St., Suite 202D
Durham, NC 27701
