FDIC Federal Register Citations

Jeffrey Cowherd
945 S Orange Avenue
Orlando, Fl 32806

March 8, 2004

Dear FDIC:

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.

The small bank CRA examination process was an excellent innovation. As a
community banker, I applaud the agencies for recognizing that it is time
to expand this critical burden reduction benefit to larger community
banks. At this critical time for the economy, this will allow more
community banks to focus on what they do best-fueling America's local
economies. When a bank must comply with the requirements of the large
bank CRA evaluation process, the costs and burdens increase dramatically.
And the resources devoted to CRA compliance are resources not available
for meeting the credit demands of the community.

Adjusting the asset size limit also more accurately reflects significant
changes and consolidation within the banking industry in the last 10
years. To be fair, banks should be evaluated against their peers, not
banks hundreds of time their size. The proposed change recognizes that
it's not right to assess the CRA performance of a $500 million bank or a
$1 billion bank with the same exam procedures used for a $500 billion
bank. Large banks now stretch from coast-to-coast with assets in the
hundreds of billions of dollars. It is not fair to rate a community bank
using the same CRA examination. And, while the proposed increase is a
good first step, the size of banks eligible for the small-bank streamlined
CRA examination should be increased to $2 billion, or at a minimum, $1
billion.

Ironically, community activists seem oblivious to the costs and burdens.
And yet, they object to bank mergers that remove the local bank from the
community. This is contradictory. If community groups want to keep the
local banks in the community where they have better access to
decision-makers, they must recognize that regulatory burdens are
strangling smaller institutions and forcing them to consider selling to
larger institutions that can better manage the burdens.

Increasing the size of banks eligible for the small-bank streamlined CRA
examination does not relieve banks from CRA responsibilities. Since the
survival of many community banks is closely intertwined with the success
and viability of their communities, the increase will merely eliminate
some of the most burdensome requirements.

In summary, I believe that increasing the asset-size of banks eligible for
the small bank streamlined CRA examination process is an important first
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. I also urge the agencies to seriously consider
raising the size of banks eligible for the streamlined examination to $2
billion or, at least, $1 billion in assets to better reflect the current
demographics of the banking industry.

Sincerely,
Jeffrey B. Cowherd