September I7, 2004Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
55017th St. NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a former legal services attorney, and a civil rights investigator
who encounters on a daily basis low- and moderate-income persons is in
need of a wide range of opportunities and services that the well-to-do
are oblivious to, I urge you to not turn a blind eye to those less
fortunate and withdraw your proposed changes to the Community
Reinvestment Act (CRA) regulations. CRA has been instrumental in
increasing homeownership, boosting economic development, and expanding
small businesses in the nation's minority, immigrant, and low- and
moderate-income communities: Your proposed changes are contrary to the
CRA statute and Congress' intent because they will slowdown, if not halt
the progress made in community investment.
Under the current CRA. regulations, banks with assets of at least
$250 million are rated by performance evaluations that scrutinize their
level of lending, investing and services to low- and moderate-income
communities. The proposed changes will eliminate the investment and
service parts of the CRA exam for state-chartered banks with assets:
between $250 million and $I billion. In place of the investment
and service parts of CRA exam, the FDIC proposes to add a
community development criterion. The community development criterion
would require banks to offer community development loans, investments
and services.
The community development criterion would be seriously deficient as a
replacement for the investment and services tests. Mid-sized banks with
assets between $250 million and $ I billion would only have to engage in
one of three activities: community development lending; investing or
services. Currently, mid-sized banks must engage in all three
activities. Under your proposal, a mid sized bank could now choose a
community development activity that is easiest for the bank instead of
providing an array of comprehensive community development activities
needed by low- and moderate income communities. THIS IS SIMPLY NOT
ENOUGH.
Here in the state of Iowa, ALL BUT ONE of the 297 banks regulated by
the FDIC would be exempt from the stricter "three part test." The effect
of removing that many banks from the need to engage ire all three levels
of lending and services will be devastating to Iowa's rural areas as
well as its larger urban communities.
The consequences for low- and moderate-income communities is that CRA
examiners will no longer expect midi, size banks to maintain anchor
build bank branches in their communities. Mid sized banks will no
longer make sustained efforts to provide affordable banking services,
and checking and savings accounts to consumers with modest income.
Mid-size banks will also not respond to the needs for the growing demand
for services needed by immigrants which is a growing population in Iowa.
In summary, your proposal is directly the opposite of CRA's statutory
mandate of imposing a continuing and affirmative obligation to meet
community needs. Your proposal will dramatically reduce community
development lading, investing and services. You compound the damage of
your proposal in rural areas, which are least able to afford reductions
in credit and capital. You also eliminate critical data on small
business lending. Two other regulatory agencies, the Federal Reserve
Board and the Office of the Comptroller of the Currency, did not embark
upon the path you are taking because they recognized the harm it would
cause.
CRA is too vital to the production and maintenance of affordable
housing to be gutted by regulatory fiat and neglect. Please reverse your
proposed course of action, or we will ask Congress to halt your efforts
before the damage is-done.
Sincerely,
Keirsten Anderson
1407 N. Zenith Ave.
Davenport, IA 52804
