Federal Deposit
Insurance Corporation

From: John Elza [mailto:jelza@hocwv.org]
Sent: Wednesday, October 20, 2004 3:31 PM
To: Comments
Cc: John Elza
Subject: Community Reinvestment -- RIN 3064-AC50

I oppose the FDIC’s proposal to allow banks with assets above $250 million to be examined as small banks under the Community Reinvestment Act. This policy would reduce lending, investments and services in low-income communities.

The FDIC proposed rule will harm affordable housing, and community and economic development, particularly in rural areas.

CRA has been a powerful impetus for community development loans, investments and services, benefiting low-and moderate-income persons. With government subsidies drying up, now is not the time to eliminate regulatory incentives for private capital to leverage scarce subsidy dollars.

Some specific recommendations:

Phase-in any increase in the asset level over several years. During this period, the FDIC and other financial regulators should evaluate whether there has been significant negative impact on lending, investments or services – and respond appropriately to any such changes.

Use current/past performance to establish a “CRA baseline level” that essentially creates a safe-harbor for institutions that continue to meet or exceed the “CRA baseline level” for their institution and not subject them to the full requirements of CRA reporting.

Add a community development activity criterion that would require banks to demonstrate that their qualifying activities represent some reasonable proportion of their overall line of business.

Maintain some level of business lending data reporting for mid-size banks.

Community development activities in rural areas should require that the needs of low- and moderate-income individuals in rural areas be met. Provide some type of “bonus points” for community development activities specifically targeted to low- and moderate-income individuals in rural areas.

“Rural” should be defined as including any geographic area and/or property that would be eligible for any services provided by the Farmer’s Home Administration (FmHA).