Federal Deposit
Insurance Corporation

Texas State Senate

October 27, 2004

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

RE: RIN 3064-AC50

Dear Mr. Feldman:

I am writing to express my strong opposition to the Federal Deposit Insurance Corporation's (FDIC) proposal to weaker. the Community Reinvestment Act (CRA) regulations for mid-size banks. Since its inception in 1977, the CRA has played an important role in revitalizing minority and lower income neighborhoods and providing opportunities for those individuals who have historically been barred access to the American dream. The FDIC proposal would dramatically reduce lending and investments in these underserved communities and hamper efforts to increase local community reinvestment.

Currently, the CRA requires banks with assets of more than $250 million to meet certain requirements in community development lending, investing, and services in low and moderateincome communities. As a result, banks have invested an estimated $1.5 trillion in affordable housing projects, medical clinics, and other important services in these areas.

The FDIC's current proposal to exempt mid-size banks with assets between $250 million and $1 billion from the more stringent CRA examination would be devastating to minority and lower income communities. The number of banks required to comply with this tougher examination would drop from 1,138 to 227. Forty-four states would have fewer than 6 FDIC banks that are subject to these requirements, and of these, 8 states would have none. In Texas, 35 FDIC banks would be affected by these changes, 4 of which are within the Houston MSA. All of these banks would lack meaningful incentives to provide much-needed investments and services in lower income neighborhoods.

I also am concerned about the FDIC's plan to abandon the practice of evaluating mid-size banks based upon the number of branches they have located in low- and moderate-income
communities. In my own senatorial district, over three-quarters of the residents are minorities and over two-thirds have annual household incomes below $50,000. If bank braches begin closing in these neighborhoods as a result of the FDIC proposal, it would encourage the expansion of the already high number of payday lenders that do business in my district. This would place an undue and certainly undeserved burden on my constituents.

In sum, the current FDIC proposal would turn back the clock on the many important CRAinitiated measures that have helped to increase lending, homeownership and stimulate economic development in minority and lower income communities. Given the current state of our economy, I don't think this is a risk our nation can afford to take. I urge you to follow the lead of the Federal Reserve Board and the Office of the Comptroller of the Currency and withdraw your plans to weaken current CRA regulations.

Thank you in advance for your prompt attention to this matter. If you have any questions or need additional information, please do not hesitate to contact me.

Sincerely,
Rodney Ellis