Federal Deposit
Insurance Corporation

Baltimore Housing

October 14, 2004

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

Dear Sir:

Re: RIN 3064-AC50, Federal Deposit Insurance Corporation's Proposed Revision to the Community Reinvestment Act; Proposed Rule

On behalf of Baltimore Housing, I appreciate the opportunity to comment on the Federal Deposit Insurance Corporation's (FDIC) proposed revisions to the Community Reinvestment Act (CRA).

I write to urge you to withdraw the proposed changes to CRA. CRA has been instrumental in creating affordable housing opportunities, increasing access of low-to moderate-income and minority citizens to banking services, and protecting our most vulnerable populations from predatory lending here in Baltimore.

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 exams for state-chartered banks with assets between $250 and $1 billion. In replace of the investment and service parts of the CRA exam, FDIC proposes to add a community development criterion, which would require banks to offer either community development loans, investments, or services. This community development criterion is seriously deficient as a replacement for the investment and service tests since, under this proposal, banks between $250 million and $1 billion could choose one community development activity, instead of providing an array of comprehensive activities needed by low- and moderate-income communities.

FDIC's proposed changes, coupled with the Office of Thrift Supervision 's recent increase in the asset threshold for small institutions to $1 billion, sets a dangerous precedent. If all four federal regulators were to increase the asset threshold to $1 billion, 16 of the 69 banks in the Baltimore area would have watered-down exams. These 16 banks have approximately $7.38 billion in total assets, which account for about 29% of total bank assets in the Baltimore area.

Many of these banks have been critical in providing support to community-based nonprofit housing organizations in Baltimore City. To name a couple, Arundel Federal Savings Bank has extended up to $200,000 in credit to the Brooklyn-Curtis Bay Coalition, a community development corporation that works with communities in South Baltimore to promote home ownership, abate drug nuisance, enforce housing code compliance, and facilitate community access to government agencies and services. The line of credit will be coupled with a $250,000 grant from the State of Maryland to help acquire and rehabilitate properties in highly economically disadvantaged communities. Bradford Bank has supported the work of one of our most highly effective community development corporations, Patterson Park Community Development Corporation, by originating loans totaling $350,000 for the purchase and rehabilitation of seven single-family homes in eastern Baltimore City.

If FDIC's proposed changes to CRA are implemented, there will be little oversight on these types of community development lending activities, which will undoubtedly translate into considerably less capital for our underserved communities, where community-based nonprofit housing organizations are leading the way in eliminating blight, creating affordable housing opportunities, and increasing neighborhood pride and confidence.

Baltimore Housing opposes the proposed increase in the asset threshold of "small banks" and urges FDIC to maintain the current $250 million threshold.

If further information would be helpful, please feel free to contact me. Thank you for your attention to this critical matter.

Sincerely
Paul T. Graziano
Commissioner