Federal Deposit
Insurance Corporation

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

RE: RIN 3064-AC50

Dear Mr. Feldman:

Speaking for the Board of Directors of the Hazelwood Initiative, Inc. (HI), I exhort you to withdraw your proposed changes to the Community Reinvestment Act (CRA) regulations. Our organization is an active member of the Pittsburgh Community Reinvestment Group.

From our viewpoint, CRA has been instrumental in increasing homeownership, boosting economic development, and expanding small businesses in Pittsburgh's low- and moderate-income and minority communities. Your proposed changes are counter to the intent and application of CRA ase they will set back the progress made in community development.

As you are well aware, CRA exams currently look at the number of loans, investments, and services that banks with more than $250 million in assets make to low- and moderate-income communities. Your proposal will eliminate the investment and service portion of the CRA exam for banks with assets between $250 million and $1 billion. That will apply directly to several key banking institutions here in Pittsburgh.

To replace the investment and service parts of the CRA exam, the FDIC proposes to add an inadequate community development criterion. Mid-size banks with assets between $250 million and $1 billion would only have to engage in one of three activities: community development lending, investing or services. Currently, mid-size banks must engage in all three activities. The Hazelwood Initiative believes that the end result will be significantly fewer loans investments in affordable home-ownership programs, small business loans and community based development lending. Traditionally, mid-size banks have accomplished these activities by developing innovative products and creating underwriting criteria to meet the needs of underserved communities and their development corporations. By eliminating the requirements set forth by CRA, mid-size banks may not adhere to these actions when conducting banking practices.

The elimination of the service test will especially have a harmful consequence for low- and moderate-income communities in Pittsburgh. CRA examiners will no longer expect mid-size banks to place bank branches in low- and moderate-income communities. This would hamper our efforts to provide affordable checking and savings accounts to consumers with modest incomes.

Additionally, 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, which is a fundamental aspect of community development.

In closing, we believe your proposal is in direct opposition to CRA's mandate of imposing an obligation to meet community needs. Two other federal agencies did not embark upon this path because they recognized the harm it would cause. The Community Reinvestment Act is too vital to be gutted by regulators. If you continue your proposed course of action, we will be forced to-ask that Congress halt your efforts before the damage is done.

Sincerely,
James W. Richter
Coordinator