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FDIC Federal Register Citations
Senior Citizens' Law Office
October 26, 2004
Mr. Robert E. Feldman Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
On behalf of Senior Citizens' in Albuquerque, I strongly urge you to
withdraw your recent proposed changes to the Community Reinvestment
Act (CRA) regulations. Nationwide, CRA has been instrumental in increase
home ownership, boosting economic development, and expanding small
businesses in the nation's minority, immigrant, and low-and moderate-income
communities. The proposed changes are contrary to the CRA statue and
Congress' intent because they would reduce, or likely halt, the progress
made in community reinvestment.
Under the current CRA regulations, banks with assets of at least $250
million are rated by performing 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 exam for state-charted banks with assets between $250 million
and $1 billion. In places of the investments and service parts of the
CRA exam, the FDIC proposes to add a community development criterion.
The community development criterion would require banks to offer community
development loans, investments or services.
The community development criterion is seriously deficient because mid-size
banks with assets between $250 million and $1 billion would only have
to engage in one of three activities: community development lending,
investing or services. Currently, mid-size banks must engage in all three
activities. Under your proposal, mid-size bank can now choose a community
development activity that is easiest for the bank instead of providing
an array of comprehensive community development activities needed by
low-and moderate-income communities.
The proposed community development criterion will result in significantly
fewer loans and investments in affordable rental housing, Low-Income
Housing Tax Credits, community service facilities such as.health clinics,
and economic development projects. It will be too easy for a midsize
bank to demonstrate compliance with a community development criterion
by spreading around a few grants or sponsoring a few home ownership
fairs rather than engaging in a comprehensive and consistent effort
to provide community development loans,. investments, and services.
The proposal would make 879 state-chartered banks with over $392 billion
in assets eligible for the streamlined and cursory exam. In total, 95.7
percent or more than 5,000 of the state-charted banks ;your agency regulates
have less than $1 billion in assets. These 5,000 banks have combined
assets of more than $754 billion. There are 32 banks in New Mexico that
fall into this category. Another negative element of the proposal is
the elimination of the small business lending data reporting requirement
of mid-size banks. Mid-size banks with assets between $250 million and
$1 billion would no longer be required to report small business lending
to census tracts or revenue size of the small business borrowers. Without
data on lending to small businesses, it is impossible for the public
at large to hold the mid-size banks accountable for responding to the
credit needs of minority-owned, women-owned, and other small businesses.
Data disclosure has been responsible for increasing access to credit
precisely because disclosure holds banks accountable. The proposal will
decrease assess to credit for small businesses, which is directly contrary
to CRA's goals
Our elderly clients need affordable housing which CRA's obligation makes
possible.
Sincerely, O
Patricia McE. Stelzncr
L
SCLO Staff Attorney
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