Federal Deposit
Insurance Corporation

Council for Affordable and Rural Housing

October 7, 2004

The Honorable Donald E. Powell Chairman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, D.C. 20429

Dear Mr. Chairman:

The Council for Affordable and Rural Housing (CARH) is a trade association representing the interests of over 350 private for-profit and nonprofit companies, as well as state and local housing finance agencies throughout the country. Members of CARH build finance, manage, own and supply products and services to the affordable rural housing industry. We are writing again to express our opposition to RIN 3064-AC50 which would revise the regulations implementing the Community Reinvestment Act (CRA).

CARH members are concerned with the proposal for a number of reasons. Throughout the country, CRA has been instrumental in increasing homeownership, boosting economic development and expanding small 'business. We believe the proposal would undermine the intent of the CRA by decreasing the regulatory incentives for mid-sized banks to make investments to and provide services for underserved communities. More importantly however, the proposal would shift the focus of community development away from activities that benefit low and moderate income individuals, to activities that benefit any individual who reside in rural areas, regardless of income.

Sweeping changes would be made to the definition of community development activities. This change is fundamentally flawed and could dilute scarce resources away from underserved areas of the country. The definitional change would apply td all banks regulated by the FDIC. Furthermore, approximately 229 FDIC-regulated banks with assets greater than $1 billion would also be exempted from any requirement to :serve the needs of low-and moderate-income individuals.

One area that could be seriously impacted is lending for housing. If the proposal is adopted in its current form, CRA reviews would not hold banks accountable for investing in the Low Income Housing Tax Credit, a major source of affordable rental housing for low-income working families.

The proposed regulation will undermine the nearly three decades of innovative investments in underserved communities across the country. CARH urges you to withdraw the proposed rule.

Sincerely
Colleen M. Fisher
Executive Director