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From: Ruth Cavanagh
[mailto:rcavanagh@baystatesavings.com]
Sent: Monday, April 05, 2004 12:18 PM
To: Comments
Subject: Community Reinvestment Act Regulation
Ruth Cavanagh
28 Franklin Street
Worcester, MA 01608
April 5, 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.
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 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.
Sincerely,
Ruth M. Cavanagh
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