FDIC Federal Register Citations

August 31, 2004

Dear Sir:

Re: RIN 3064-AC50, Federal Deposit Insurance Corporation’s Proposed Revision to the Community Reinvestment Act; Proposed Rule

On behalf of the National Housing Conference (NHC), I appreciate the opportunity to comment on the Federal Deposit Insurance Corporation’s (FDIC) proposed revisions to the Community Reinvestment Act.

The National Housing Conference is a nonprofit 501(c)(3) membership association dedicated to advancing affordable housing and community development causes. A membership drawn from every segment of the housing community forms the foundation for NHC’s broad, nonpartisan advocacy for national policies and legislation that promote suitable housing in a safe, decent environment across the nation.

The Community Reinvestment Act (CRA) has been a powerful and successful tool for revitalizing low- and moderate-income communities and supporting affordable housing. CRA also can be pointed to as one the principal driving forces behind increased homeownership and economic development in these formerly financially underserved communities.

NHC is concerned that the FDIC’s proposed rule change to increase the asset threshold of “small banks” from $250 million to $1 billion will result in a significant reduction in affordable housing investment across the nation and specifically in rural areas. We urge the FDIC to maintain the current $250 million threshold for small banks.

Raising the small bank threshold to $1 billion would exempt thousands of FDIC-insured banks from meeting the current CRA standard that requires them to demonstrate investments and services in low- to moderate-income areas. It is this exemption of approximately 2,000 banks nationwide with assets of nearly $1 trillion that will drastically reduce investment in affordable housing and other community development activities.

Additionally, financial institutions with assets of $250 million to $1 billion comprise substantial market share in rural areas and such a change will mean that many rural communities and several states will not have any institutions required to offer services and investments that benefit low- to moderate-income communities.

CRA is a critical component of affordable housing and community development activities occurring around the nation. While we understand that this proposed change is intended to reduce regulatory obstacles, it is doing so at the expense of those communities most in need of reinvestment. NHC opposes the proposed increase in the asset threshold of “small banks” and urges the FDIC to maintain the current $250 million threshold.

The National Housing Conference is pleased to be able to submit these comments. If further information would be helpful, please feel free to contact me.

Sincerely,

Conrad E. Egan
President and CEO
National Housing Conference
1801 K Street, NW, Suite M-100
Washington, DC 20006-1301
Telephone: (202) 466-2121 ext. 224
Email: cegan@nhc.org