September 16, 2004
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman:
As a small town businessperson, I write in strong support of the
FDIC's proposal to increase the asset size limit of banks eligible for
the streamlined small-bank CRA examination. I also strongly support the
elimination of the separate holding company qualification.
The proposal will greatly alleviate unnecessary paperwork and
examination burden without wakening our commitment to reinvest in our
communities. Reinvesting in our communities is something we do everyday
as a matter of good business. Our community bank will not long survive
if our local community doesn't thrive, and that means our bank must be
responsive to community needs and promote and support community and
economic development.
It is important to remember that the streamlined CRA exam is not an
exemption from CRA, but more cost effective and efficient CRA exam.
Banks subject to the simplified CRA exam are still fully obligated to
comply CRA.
One of the problems with the current large bank CRA exam is that the
definition of "qualified investments" is too limited, and qualified
investments can be difficult to find. As a result, many community banks
(especially those in rural areas) have to invest in regional or
statewide mortgage bonds or housing bonds and the like to meet CRA
requirements. These investments may benefit other areas of the state or
region, but they actually take resources away from the bank's local
community. Community banks and communities would be better off if the
banks could truly reinvest those dollars locally to support their own
local economies and residents.
For this reason, I find that the FDIC's proposed community
development requirement for banks between $250 million and $1 billion is
more flexible and more appropriate than the large bank investment test.
The advantage to this proposal is that it continues to focus on
community development, but considers investments, lending and services.
It would let community banks pursue community development activities
that both meet the local community's needs and make sense in light of
the bank's strategic strengths.
Similarly, the proposal will help rural banks meet the special needs
of their communities by expanding the definition of "community
development" so that it includes activities that benefit rural residents
in addition to low space-and moderate-income individuals.
The FDIC's proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more and more community
banks such as our community bank will find they cannot sustain
independent existence because of the crushing regulatory burden, and
will opt to sell out. For many small towns and rural communities, the
loss of the local bank is major blow to the local community.
Thank you for considering my views.
Sincerely
John J. Kelly
Pontiac, IL
