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MERAMEC VALLEY BANK April 1, 2004
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 200551
Re: Docket No. R-1181
regs.comments@federalreserve.gov
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
comments@fdic.gov
Re: Community Reinvestment Act regulations
As a community bank, Meramec Valley Bank strongly endorses the
federal bank regulators’ proposal to increase the asset size, from $250
million to $500 million, of those banks eligible for the small-bank,
streamlined, Community Reinvestment Act (CRA) examination process, and
to eliminate the holding company size limit. This proposal will greatly
reduce regulator burden.
The small bank CRA examination process was an excellent innovation.
As community bankers, we applaud the agencies for recognizing that it is
time to expand this regulatory burden reduction benefit to larger
community banks, and we encourage the agencies in your efforts to find
other areas in which similar benefits may also be structured. At this
critical time for the United States economy, we must 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. This means that the resources devoted to this and other
areas of regulatory compliance are resources not available for meeting
the credit needs of our community.
Adjusting the asset size limit also more accurately reflects the
significant changes and consolidation which have occurred within the
banking industry over the past ten years, and which continue today. To
be fair, banks should be evaluated against their peers, not against
banks hundreds of times their size. And, while the proposed increase is
a good start, we encourage consideration of further increases of asset
size eligibility to $1 billion or more.
Ironically, community activists seem oblivious to the costs and
burdens of regulatory compliance. If community groups want to keep the
local banks in the community, where customers have better access to
decision-makers, they must recognize that regulatory burdens are
strangling the smaller institutions, 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 of their 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 more burdensome requirements.
In summary, we believe that increasing the asset size of banks
eligible for the small-bank CRA process is an important first step in
reducing regulatory burden. We also support eliminating the separate
holding company qualification for the streamlined examination, since it
places smaller 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 the CRA, this change will
eliminate some of the most problematic elements of the current
regulation from community banks that are drowning in red tape. We also
urge the agencies to continue to look for other ways in which regulatory
burden might be reduced.
Very truly yours,
MERAMEC VALLEY BANK
Donna L. Bymes
Assistant Vice President, Compliance Officer
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