Federal Deposit
Insurance Corporation

October 20, 2004

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

Via e-mail: comments@fdic.gov
Subject line in e-mail: RIN 3064-AC50

Re: RIN 3064-AC50; Oppose revising the Community Reinvestment Act

Dear Mr. Feldman:

On behalf of the City of Santa Maria, I am asking the Federal Deposit Insurance Corporation (FDIC) to oppose revisions that would weaken the Community Reinvestment Act (CRA) requirements for mid-sized banks. CRA is vital for increasing home ownership and economic development in lower-income communities. The proposed changes will harm the progress that has been made.

The (FDIC) has renewed its efforts to weaken regulations that govern how financial institutions meet the credit needs of lower income and disadvantaged communities. According to many advocates for the CRA, the FDIC proposal would significantly weaken the law by raising the assets ceiling defining a “small bank” from $250 million to $1 billion. The new proposal would exempt all but 223 (out of 5,291) FDIC-supervised banks from full CRA exam treatment. In short, these banks would be exempted from undergoing a much more stringent three-part exam test.

“For small and large cities alike, especially for those that are trying to attract new development projects and businesses, such action will have a devastating impact” said, Don Borut, executive director of the National League of Cities. “The bottom-line is that if the proposal succeeds there may be far less capital available for affordable housing and community economic development borrowers in underserved communities.”

The CRA has long been an instrumental tool in the fight to increase home, small business and community development lending in under-served and lower income communities. The law was originally enacted in 1977. The law’s primary goal is to ensure that low- and moderate-income neighborhoods and individuals are given fair and equal access to credit and depository financial services.

Many low- and moderate-income groups and communities would have no viable way to create new businesses or generate positive economic growth and development unless they are provided with reasonably equal and fair access to capital.

In closing, the FDIC’s changes directly oppose CRA’s mandate to require lenders to meet community needs. Please drop this proposal.

Sincerely,
LARRY LAVAGNINO
Mayor of Santa Maria