Federal Deposit
Insurance Corporation

From: Lloyd May [mailto:lemconsulting@hotmail.com]
Sent: Monday, October 25, 2004 1:35 PM
To: Comments
Subject: RE: RIN 3064-AC50

Lloyd May
Chicago, II 60619

October 25, 2004

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 roblem 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,
Lloyd E. May, J.D.