UNITED STATES CONFERENCE
OF CATHOLIC BISHOPS
September 16, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429
RE: RlN 3064-AC50
Dear Mr. Feldman:
On behalf of the United States Conference of Catholic Bishops, I urge
that you withdraw the proposed changes to the Community Reinvestment Act
(CRA) regulations. The Bishops' Conference has strongly supported the
disclosure of lending patterns since legislation was first introduced in
1975. The Catholic Church—with parishes and agencies across the
nation—believes that people must be permitted access to information
about the lending practices and patterns of the financial institutions
in their communities that seek their business. CRA has been an
effective financial vehicle for rural and urban communities for
decades. Low and moderate income families of all races and ethnicities
have benefited from CRA with increased opportunities to purchase homes,
open small businesses, or operate farms. The success of local
communities gaining access to private capital should not be jeopardized.
The proposed changes will dramatically reduce the ability of communities
to monitor and promote community reinvestment.
Currently, banks with assets of at least $250 million are rated by
performance evaluations that scrutinize their level of lending,
investing, and services: within low- and moderate-income communities.
The proposed changes would substitute a less challenging criterion of
community development for state-charted banks with assets between $250
million and $1 billion. This proposal would allow mid-size banks to
choose a loosely defined "community development activity" rather than
the current requirement of providing comprehensive community development
activities needed by low- and moderate-income communities.
Many believe, and we fear, that the proposed community development
criterion could result in fewer loans and a significant reduction in
affordable rental housing investments. Community service facilities and
economic development projects would falter from lack of financial
support, as mid-size banks no longer maintain or build branches in low-
and moderate-income communities. Families in these communities would
lose access to affordable banking services.
People in rural communities especially would be disadvantaged by the
new regulations that propose to consider any kind of community
development activities in rural areas as meeting CRA requirement
regardless of whether they focus on low- and moderate-income individuals
or not. This would allow banks to focus on affluent residents of rural
areas, diverting community development activities away from the low- and
moderate-income communities and consumers that CRA is designed to help.
I urge you to withdraw and reconsider how best to strengthen—not
weaken—CRA's affirmative obligation of banks to meet credit needs. We
seek to expand and enlarge community reinvestment. The regulations, as
proposed, are likely to result in a significant reduction in the level
of community reinvestment.
Sincerely
John L. Carr, Secretary
Department of Social Development and World Peace
United States Conference of Catholic Bishops
3211 Fourth St., NE
Washington, DC 20017
