Federal Deposit
Insurance Corporation

From: Greg Rosenberg [mailto:gregory@chorus.net]
Sent: Friday, October 15, 2004 4:36 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

To Whom It May Concern

I am writing to express my deep concern about the proposed changes to the Community Reinvestment Act.

In the late 1980's, I worked in Jackson, Michigan, where I saw first-hand the impact of financial disinvestment in minority neighborhoods. Actually, it wasn't disinvestment at all -- because local banks had never invested in the first place. On the southside of Jackson, people had to buy houses via land contracts or subprime lenders, because no bank or savings and loan would provide them with a mortgage. Credit cards -- forget about it. Home equity loans -- no way. Banks did not want black folks' business, plain and simple.

I worked quite closely with Bishop Ira Combs (then Rev. Combs), who could not find a bank to work with him. His church was growing rapidly, and they wanted to expand their building, as well as begin to provide social services on the southside of Jackson, such as group homes for persons with disabilities. With the leverage provided by the CRA, Bishop Combs was able to secure needed financing for his church, and has since gone on to become a model of faith-based service provision. In fact, Bishop Combs is now a member of President Bush's African American advisory committee. Without the CRA, I do not know if this story would have had such a happy ending -- because it was the threat of a CRA challenge that finally got banks to the table.

For many smaller communities like Jackson, or Madison, WI, where I now live, the proposed changes in the CRA would mean that the majority of financial institutions serving smaller communities would no longer be covered by the CRA. Here is Madison, it was the leverage provided by the CRA that enabled the community to secure the first affordable mortgage programs offered by area banks. Now these programs are commonplace -- but it was the CRA that made it possible.

Now I am the executive director of a nonprofit housing development organization. Without the CRA, I do not know how we would be able to get the construction financing that we need to do our work, or how our homebuyers would get the mortgages they need to buy our homes.

Sure, CRA involves extra paperwork. But we all have paperwork to deal with, and that is no excuse to avoid compliance.

Smaller financial institutions play a critical role in development of communities. That is where you can walk right up to the person who makes all the decisions. They can do so much to help a community -- and some of them need to be reminded that it's not just affluent folks who need financial services. The CRA is there to be that reminder.

The FDIC provides an advantage to financial institutions that no other business gets -- low-cost guarantees against losses -- i.e. depository insurance. In return, they should be expected to give something back to the community.

Greg Rosenberg
Madison, Wisconsin