NEW HAMPSHIRE COMMUNITY LOAN FUND
Mr. Robert E. Feldman
Executive Secretary
ATTN: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 E. 17th Street, NW
Washington,
DC 20429
September 14, 2004
RE: RIN 3064-AC50
Dear Mr. Feldman:
On behalf of the New Hampshire Community Loan Fund and the thousands
of low- and moderate-income families we serve, I urge you to withdraw
your proposed changes to the Community Reinvestment Act (CRA)
regulations. If enacted, the FDIC will define small banks as those with
$1 billion and less in assets.
Under current regulations, banks with assets of at least $250 million
have performance evaluations that review lending, investing, and
services to low- and moderate-income communities. You propose that
state-chartered banks with assets between $250 million and $1 billion
follow a community development criterion that allows banks to offer
community development loans, investments, or services. This will result
in significantly fewer loans and investments in low-income communities.
Currently, mid-size banks must show activity in all three areas of
assessment. Under the proposed regulations, the banks will now be able
to pick the services convenient for them, regardless of community
needs.
If enacted, this would be a body blow to the community economic
development efforts in New Hampshire. A statewide community development
finance institution, the New Hampshire Community Loan Fund has had a
remarkably productive relationship with the New Hampshire banking
community. This relationship is multi-layered. First, when we make loans
for affordable housing or businesses, we inevitably find banks to
partner with us. Over the twenty-one year history of the New Hampshire
Community Loan Fund, we have made loans of over $61 million in
community economic development projects. Our $61 million has been
matched by $111 million in investments by others in these projects –
nearly all of it from New Hampshire banks.
Second, we have received significant grants and gifts from the New
Hampshire banking community over the years: cumulatively, over $2
million. This support has underwritten new initiatives and strengthened
existing programs. No other private sector group has come close to the
generosity of the banking community.
Finally, New Hampshire banks have loaned or invested over $9 million
directly in the Loan Fund. These commitments, many of which are
categorized as subordinated near-equity investments, have allowed us, in
turn, to make loans to the community, and to attract more investments
from individuals, churches, and other institutions.
Nearly all of the banks who have partnered and supported us have less
than $1 billion in assets. These mid-size banks have been vitally
important to our work – and they clearly have made their commitments to
us, and to the low-income community, largely in response to the
expectations of the CRA Act.
We have seen the impact of our work. We've helped create or preserve
3,769 units of affordable housing, 2,259 child care spaces, and 866
jobs. We've seen lives change once people learn that they can gain
economic traction and share the benefits of capitalism. Yet without the
partnership of the New Hampshire banking community, we would not have
been able to achieve a fraction of this success.
The proposed regulation is in direct opposition to Congressional
intent of the law. In a letter signed by thirty U.S. Senators to the
four regulatory agencies regarding an earlier proposal (February 2004)
to increase the definition of "small bank" from $250 million to $500
million, the Senators wrote, "This proposal dramatically weakens the
effectiveness of CRA.... We are concerned that the proposed regulation
would eliminate the responsibility of many banks to invest in the
communities they serve through programs such as the Low Income Housing
Tax Credit or provide critically needed services such as low-cost bank
accounts for low- and moderate-income consumers."
This latest proposal would remove 879 state-chartered banks with over
$392 billion in assets from scrutiny. Our understanding is that 91% of
the banks currently facing CRA review in New Hampshire would no longer
be subject to examination. This will have a disastrous effect on low-
and moderate-income communities. Without this examination, mid-size
banks will no longer have to make efforts to provide affordable banking
services or respond to the needs of these emerging domestic markets.
In addition, your proposal eliminates small business lending data
reporting for mid-size banks. Without data on lending to small
businesses, the public cannot hold mid-size banks accountable for
responding to the credit needs of small businesses. Since 95.7% of the
banks you regulate have less than $1 billion in assets, there will be no
accountability for the vast majority of state-chartered banks.
Your proposal would seem to be especially harmful in rural
communities such as New Hampshire. The proposal seeks to have community
development activities in rural areas counted for any group of
individuals regardless of income. This particular provision about rural
lending would completely undermine the intent of the CRA law to help
those with low and moderate incomes gain economic opportunity.
The FDIC should be doing more to strengthen the CRA and support our
communities. We fear that your proposal does just the opposite.
The impetus for the creation of the CRA was to encourage federally
insured financial institutions to meet the credit and banking needs of
the communities they serve, especially low- and moderate-income
communities. We have seen this work effectively here in New Hampshire.
This proposal undermines the intent of CRA, and threatens to undo the
years of effort to bring "unbanked" consumers into the financial
mainstream. I urge you to remove this dangerous proposal from
consideration.
Sincerely,
Juliana Eades
President
New Hampshire Community Loan Fund
7 Wall Street • Concord, New Hampshire 03301
cc: Senator Judd Gregg
Senator John E. Sununu
Congressman Jeb Bradley
Congressman Charles Bass
