From: Neil Beckman
Sent: Monday, March 15, 2004 5:05 PM
To: Comments
Subject: Community Reinvestment Act Regulation
Neil Beckman
300 S Sophie St
Bessemer, MI 49911
March 15, 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. 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.
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 feel that there needs to be a specific set of guidelines instituted
that will allow community banks to earn and outstanding rating.
I find it very ironic that small banks that do nothing but serve their
local communities cannot earn an outstanding rating a $ 500 billion
bank
which serves no one but its shareholders and corrupts the whole banking
process, can get an outstanding rating.
Each bank should be required to reinvest 75% of all deposits received
from
local cities to be reinvested in the local community.
This is what community banks do, not large corporate banks. A large
bank
uses deposits from rural and small communities to fund loans in large
metropolitan areas and their mortage companies.
Sincerely,
Neil J. Beckman
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