March 8, 2004
Dear Sir or Madam:
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 $l billion). This proposal will greatly reduce regulatory
burden.
I am the President/CEO of Greenfield Banking Company, a $270 million
asset bank located in Greenfield, Indiana.
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 bankers. 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
ten 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 suppose 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.
James W. Miller, President/CEO
Greenfield Banking Company, Greenfield, IN.
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