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FDIC Federal Register Citations

National Hispanic Leadership Agenda

April 5, 2004

Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E St. SW,
Washington 20219

Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551

Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429

Regulation Comments, Attention: No. 2004-04
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street NW
Washington DC 20552

Dear Officials of Federal Bank and Thrift Agencies:

On behalf of the National Hispanic Leadership Agenda (NHLA), a coalition of national Hispanic public policy and civil rights organizations, I am writing to urge you to withdraw the proposed changes to the Community Reinvestment Act (CRA) regulations.

Since 1977, the CRA has worked to protect the economic development of low- and moderate- income communities and has been instrumental in increasing access to affordable housing, homeownership and expanding small business opportunities. While current CRA regulations provide for the evaluation of the level of banking services and investment in neighborhoods traditionally underserved by lending institutions; discrimination, predatory lending, and a lack of financial resources and services continue to disproportionately affect Americans of Hispanic descent and minority low-and moderate – income neighborhoods.

The proposed CRA regulation changes would not only weaken current standards and threaten community reinvestment but also make it more difficult for regulatory agencies to protect neighborhoods already at risk. The proposed regulatory changes would reduce the quality and accuracy of CRA exams by eliminating the investment and service portions for banks and thrifts with assets between $250 and $500 million.

According to the FDIC, about 1,111 banks fall within that bracket and account for an estimated $387 billion in assets. Because these banks would no longer be held accountable--for investing in low income-housing tax credits or the provision of bank branches, checking accounts, individual development accounts (IDA’s), or debit card services--we are deeply concerned that these changes would result in considerably less access to banking services and capital for underserved communities.

Proposed CRA regulation changes also weaken federal policy designed to prevent predatory lending by establishing a standard that would narrowly define predatory lending as “loans based on the foreclosure value of the collateral” and that does not take into consideration the borrower’s ability to repay. Predatory lending that might result from packing of fees into mortgage loans, high prepayment penalties, mandatory arbitration and other numerous abuses would not be defined as such, therefore, actually permitting abusive lending practices, instead of setting higher penalties for offending banks.

Hispanic Americans are disproportionately targets of predatory lending due to linguistic and cultural barriers including limited English proficiency, not understanding or trusting banking institutions and having little or poor credit. NHLA feels this weak anti-predatory lending “screen” would actually facilitate predatory lending and make it more difficult to hold financial institutions accountable for compliance with consumer protection laws.

Further limitation of community banking options; will negatively impact the economic and social development of low and moderate-income communities. NHLA feels the proposed changes to CRA will significantly reduce investment in community economic development initiatives, impede access to banking services, and hinder the administration’s goals of increasing minority homeownership.

Existing financial protections should be developed and evaluated to better serve the development needs of underserved communities. Regulatory changes should not result in curtailing current banking and community investment opportunities, but should continue to hold financial institutions accountable for their performance in fulfilling the financial needs of the communities in which they are doing business.

Sincerely,

Manuel Mirabal
Chair
National Hispanic Leadership Agenda
1901 L St., Ste 802
Washington, DC 20036

Last Updated 04/14/2004 regs@fdic.gov

Last Updated: August 4, 2024