| SuttonBank Mr.
Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Attention: Comments
April, 16, 2004
Dear Mr. Feldman:
As a community banker, I strongly endorse the federal bank
regulators' proposal to increase the asset size of banks eligible for
small bank Community Reinvestment Act (CRA) examination from $250
million to $500 million and elimination of the holding company size
limit which is currently $1 billion. This proposal will greatly reduce
regulatory burden. I am the compliance officer of Sutton Bank, a $252
million bank located in Attica, OH.
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. 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 significantly larger. 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. In addition, the cut-off limit for
small bank examinations should be raised to $1 or $2 billion, instead of
the proposed $500 million.
Ironically, community activists seem oblivious to the costs and
burdens, but 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 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 with 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 $1 or $2
billion in assets to better reflect current demographics of the banking
industry.
Sincerely,
Rick Bauer
Compliance Officer
Sutton Bank
1 South Main St
Attica, OH
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