September 19, 2004
Robert E. Feldman Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW.
Washington, DC 20429
Attention: Comments/Legal ESS
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 345
RIN 3064-AC50
Community Reinvestment Act
ACTION: Notice of proposed rulemaking
In the February 2004 NPR, the agencies stated that the CRA
regulations were essentially sound, but were in need of some updating to
keep pace with changes in the financial services industry. Notably, to
reflect economic change in the industry and reduce unwarranted burden
consistent with ongoing efforts to identify and reduce regulatory burden
where appropriate and feasible, the agencies proposed to amend the
definition of "small bank" to mean an institution with total assets of
less than $500 million, without regard to any holding company
affiliation. This change would take into account substantial
institutional asset growth and consolidation in the banking and thrift
industries since the $250 million definition was adopted in 1995. In
light of certain responses found in the comment letters responding to
the February 2004 NPR, the FDIC has decided to publish for comment this
NPR with respect to how "small banks" are defined and evaluated and
other matters. The FDIC, in keeping with its commitment to review its
regulations implementing the CRA, seeks comments on whether. this
proposal presented here would: enhance the effectiveness of the CRA
regulations and CRA evaluations by addressing concerns about community
development needs, including those of rural communities; and reduce
regulatory burden by updating the regulation in light of changes in the
banking industry over the past ten years.
The concept of reducing the burden associated with Community
Reinvestment Act reporting on financial institutions is challenging for
anyone who has experienced discrimination, and/or found it difficult to
obtain banking services in a rural community. The only clear outcomes
that will result from the proposed changes to 12 CFR Part 345 is less
services in underserved markets and continuing consolidation in the in
banking industry. Before any new regulations are enacted that reduce the
reporting requirements on financial institutions more research must be
done to identify ways to increase the homeownership rate among minority
and low income families in rural America. Depository institutions must
be held accountable to the communities they serve. Beside mortgage
financing, small community banks should increase access to affordable
consumer and small business loans.
Changes in the banking industry were cited as a reason for updating
policy. When is the deterioration of the employment outlook in rural
America going to become a component in the policy making process?
Entrepreneurship is supposed to help create new jobs which will carry
the
country to economic recovery. If the financial institutions do not have
to substantiate their role in the equation, who is going to monitor
their social investment for the greater good of the country?
Consolidation in the financial services area is erodi:. the ability
of lower income families to access the capital markets because banking
personnel are being replaced by automated tellers and online banking
services at a time when many Americans_ especially Native Americans,
still operate on a cash basis. Change is a wonderful word to describe
the contraction that has been occurring in the
banking industry. We need look no further than the Oil industry to see
the long term implication of acquisitions based on the low entry cost
versus developing sustainable relationship through traditional methods.
America does not need less regulation of community banks. What
low-moderate income families need is greater access to capital.
Financial literacy training is an invaluable tool, but a well educated
consumer has little hope if the local bank does not have a vested
interest in their success.
Sincerely,
THOMAS C. WRIGHT
P.O. Box 385
1565 Pte Brulee Road
Hessel, Michigan 49745
