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From: Artika Rangan
[mailto:artika2@hotmail.com]
Sent: Thursday, April 01, 2004 2:50 PM
To: regs.comments@ots.treas.gov;
regs.comment@occ.treas.gov;
regs.comments@federalreserve.gov; Comments
Cc: rashmi@dcrac.org
Subject: changes to CRA regulations
Dear Officials of Federal Bank and Thrift Agencies:
I am writing to urge you to withdraw the proposed changes to the
Community Reinvestment Act (CRA) regulations. The proposed changes will
reverse the strides in increased access to homeownership, boosting
economic development, and expanding small businesses in Delaware.
My comments are limited to the following three major elements in the
proposal:
1) Provide streamlined and cursory exams for banks with assets
between $250 million and $500 million;
2) Establish a weak predatory lending compliance standard under CRA;
and
3) Expand data collection and reporting for small business and home
lending
Streamlined and Cursory Exams
Under the current CRA regulations, large banks with assets of at
least $250 million are rated by performance evaluations that scrutinize
their level of lending, investing, and services to low- and
moderate-income communities. The proposed changes will eliminate the
investment and service parts of the CRA exam for banks and thrifts with
assets between $250 and $500 million. That is nearly 1,111 banks which
account for more than $387 billion in assets. The elimination of the
investment and service tests for more than 1,100 banks translates into
considerably less access to banking services and capital for underserved
communities. For example, there will be little incentive to invest in
Low Income Housing Tax Credits, Individual Development Accounts (IDAs),
etc.
Predatory Lending Standard
Advocates of stronger consumer protection against predatory lending
are concerned with the asset-based lending practices in the subprime
markets. These advocates support the “ability-to-pay” standard in
lending in the subprime markets. CRA exams that shielding banks from the
consequences of abusive lending, frustrates CRA’s statutory requirement
that banks serve low- and moderate-income communities consistent with
safety and soundness.
Enhanced data disclosure
We support the federal agencies proposals for enhanced data
disclosure. The proposed changes to CRA will directly undercut the
Administration’s emphasis on minority homeownership and immigrant access
to jobs and banking services. The proposals regarding streamlined exams
and the anti-predatory lending standard threaten CRA’s statutory purpose
of the safe and sound provision of credit and deposit services. The
proposed data enhancements would become much more meaningful if the
agencies update procedures regarding assessment areas, affiliates, and
the treatment of high cost loans and purchases on CRA exams. CRA is
simply a law that makes capitalism work for all Americans. CRA is too
vital to be gutted by harmful regulatory changes and neglect. Thank you
for your attention to this critical matter.
Sincerely,
Artika Rangan
University of Delaware
Contributing Editor for The Review
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