Federal Deposit
Insurance Corporation

From: Robert Brainin [mailto:mrbraini@gsb.uchicago.edu]
Sent: Tuesday, October 19, 2004 10:14 AM
To: Comments
Subject: RE: RIN 3064-AC50

Robert Brainin
5424 S. East View Park#2
Chicago, IL 60615

October 19, 2004

FDIC FDIC
,

Dear FDIC FDIC:

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

RE: RIN 3064-AC50

Dear Mr. Feldman:

I am a concerned citizen opposed to watering down CRA (Community
Reinvestment Act) requirements for mid-sized banks. CRA is vital for
increasing homeownership and economic development in lower-income
communities. Since the passage of the CRA in 1977, great progress has
been made in ending redlining and pushing banks to improve their lending
performance in underserved communities. Banks have improved their
outreach efforts, removed barriers in underwriting criteria that excluded
credit-worthy low- and moderate-income applicants, and created loan
counseling programs that assist first-time homebuyers.

There is still a long way to go, however, and the proposed changes to the
CRA do not help us get there. At a time when stronger curbs against
predatory lending and other unscrupulous practices are needed, this
proposal weakens the already inadequate regulations of banks. I cannot
understand how an administration hopes to promote community revitalization
and wealth building when its regulatory appointees propose to dramatically
diminish banks’ obligation to reinvest in their communities.

I understand that banks with over $250 million in assets must be tested on
their number of loans, investments, and services to low- and
moderate-income communities. But your proposal would eliminate the
investment and service requirements for all banks with under $1 billion in
assets. This will result in significantly fewer loans and investments in
affordable rental housing, health clinics, community centers, and economic
development projects.

In the watered-down exam, you would allow mid-sized banks to choose which
community development activities they will undertake. Right now, these
banks must make community development loans, investments, and services.
Your proposed test allows banks to choose only one of the three
activities. The result will be less community development activity.

As someone who has supported ACORN’s campaign to end the national crisis
of predatory lending, I am concerned that these changes would not only do
nothing to help solve this crisis, but would in fact make this problem
worse. No institution that makes or purchases predatory loans should be
given a satisfactory or better rating on a CRA exam. Nor should
institutions be given credit for giving high cost subprime loans when
borrowers’ credit warrants prime loans. Yet the proposed changes do not
incorporate these important improvements. Instead, they allow thousands
of more banks to escape their responsibility to provide good loans in our
communities. In too many instances, this void will be filled by predatory
lenders.

Your changes subvert CRA’s mandate to require lenders to meet community
needs. CRA is too important to be gutted. Please follow the lead of the
two other federal agencies that recognized this proposal’s harm to
underserved communities and withdraw this proposal.

Sincerely,

Robert Brainin