State Central Bank
March 26, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Sir:
As a community
banker, I strongly endorse the federal bank regulators’ proposal
to increase the asset size of banks eligible for the small bank streamlined
Community Reinvestment Act (CRA) examination from $250 million to
$500 million and elimination of the holding company size limit (currently
$1 billion). This proposal will greatly reduce regulatory burden.
I am the Loan Review Officer of State Central Bank, a $177 million
bank headquartered in Keokuk, Iowa.
For the following
reasons, I am thankful the agencies recognize that it is time to
expand this critical burden reduction benefit
to larger community banks:
- The proposed increase will allow more community banks to focus
on what they do best: supporting the growth of our local economies,
not only by the extension of various credit products, but also by
our substantial commitment to economic development endeavors, local
boards and committees, and other community-based projects.
- Greater equity
in the CRA evaluation process is still needed; that is, banks should
be
evaluated against their peers, not
against banks
hundreds of times their size. The proposed change recognizes
that it’s just not right to assess the CRA performance of a $500
million bank or a $2 billion bank (yes, up to $2 billion!) with the
same exam procedures used for a $500 billion bank. Large banks’ trade
territories now stretch from coast to coast with assets in
the hundreds of billions of dollars, with the corresponding
cash
flows to staff
separate legal, audit, and compliance departments.
Thank you for the opportunity to express my strong belief that increasing
the asset size of banks eligible for the small bank streamlined CRA
examination process is an important step to reducing regulatory burden.
I also support eliminating the separate holding company qualification
for the streamlined examination, since it places small community
banks that are part of a larger holding company at a disadvantage
to their peers. While community banks still must comply with the
general requirements of CRA, this change will eliminate some of the
most problematic and burdensome elements of the current CRA regulation
from community banks that are drowning in regulatory red tape. Again,
I also urge the agencies to seriously consider raising the size of
banks eligible for the streamlined examination to $2 billion is assets
to better reflect the current demographics of the banking industry.
Sincerely,
Bruce D. Diercks, Loan Review
State Central Bank
(319) 524-1021
bdiercks@statecentralbank.com
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