BANK OF THE SOUTH
September 29, 2004
Robert E. Feldman
Executive Secretary
Attention: Comments/ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: RIN Number 3064-AC50
Dear Mr. Feldman:
By raising the
streamlined small bank CRA threshold from $250 million to $1 billion,
the regulatory
burden imposed on small banks under
the current regulation would be greatly relieved. Therefore, we strongly
support the FDIC’s proposal to raise the streamlined small
bank CRA examination threshold. Community banks do not have the same
resources that their mega-bank counterparts do and under the current
regulation they are examined identically. One reason that community
banks exist is to meet the credit needs of their communities and
we will continue to be evaluated as such by our regulator. The regulatory
burden on small banks has grown larger and larger. For instance,
there are massive reporting requirements under HMDA, the USA Patriot
Act and the privacy provisions of the Gramm-Leach-Bliley Act (to
name a few).
We also support the addition of a Community Development criterion
to the small bank examination for larger community banks, but we
feel that the FDIC should adopt its original $500 million threshold
with a Community Development criterion. It has been extremely difficult
for community banks, especially those in rural areas, to find appropriate
CRA qualified investments within their community. Many small banks
have made investments outside their community that more than likely
will not benefit their own community.
The nature of community banking has not changed; they exist to serve
their communities. When a community bank must comply with the requirements
of the large institution CRA examination, the costs to and burdens
on a community bank increase dramatically. In looking at our bank,
converting to the large institution examination requires that we
incur added expense in the form of staff and their associated expenses
to monitor the regulatory environment, to train employees on the
ever-changing requirements, to monitor for compliance, as well as
additional costs for monitoring tools, etc. This imposition of a
dramatically higher regulatory burden drains both money and personnel
away from the basic function of a community bank -- helping to meet
the credit needs of the community.
We strongly believe that a community bank meets the credit needs
of its community if it makes a certain amount of loans relative to
deposits taken. A community bank is typically less complex than a
large bank; it takes deposits and makes loans. Its business activities
are usually focused on small, defined geographic areas where the
bank is known in the community.
In conclusion, we strongly support increasing the asset-size of
banks eligible for the small bank streamlined CRA examination process
as a vitally important step in revising and improving the CRA regulations
and in reducing regulatory burden. While community banks, of course,
still will be examined under CRA for their record of helping to meet
the credit needs of their communities, this change will eliminate
some of the most problematic and burdensome elements of the current
CRA regulation from community banks that are already drowning in
regulatory red-tape.
Thank you for your earnest consideration of this proposal.
Sincerely,
Susan Wilson Kay Thomas
Chief Financial Officer
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