Clinton National Bank
From: Ricci Aquilani [mailto:Ricci.Aquilani@clintonnational.net]
Sent: Monday, March 29, 2004 5:06 PM
To: Comments
Subject: Re: Community Reinvestment Act Regulations
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Fax: (202) 898-3838
Email: comments@fdic.gov
Dear Sir or Madam:
As a community bank compliance officer, 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 the elimination
of the
holding company size limit (currently $1 billion). This proposal
will
greatly reduce the regulatory burden for Clinton National Bank, a
$252,000,000 bank located in Clinton, Iowa, and other banks our size
in
small communities, with fewer resources.
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 we do best-fueling America's
local
economies. When a community 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. For example,
in my bank, we have just become subject to the "large bank"
examination requirements because we have exceeded the existing
threshold. We currently spend approximately 20 -25 man-hours per
month
to maintain our compliance efforts. We estimate that we will need
to
double the time currently spent on CRA compliance in order to comply
with the "large bank" requirements. In addition, we will
need to
expend additional resources to accumulate the data necessary. As
most
community banks, we have a limited staff and are not able to assign
a
person or department solely to CRA compliance. Therefore, we draw
resources from areas that could be better utilized to serve our
community, promoting loan products and other services.
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 times their size. The proposed change
recognizes that it's not right to assess the CRA performance of a
$500
million bank or even 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
and
need to employ different methods to stay in tune with all the
communities they try to serve. It is not fair to rate a community
bank,
operating in a limited market area, using the same CRA examination.
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
imposed on the community bank by the regulations, which they promote,
to
control larger institutions. Yet, they object to bank mergers that
would create efficiencies, because they 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 examinations does not relieve banks from CRA responsibilities.
The
survival of many community banks, like mine, is closely intertwined
with
the success and viability of their communities. We strive to be aware
of the needs of the community we serve because it benefits us. The
increase in the asset size limit will merely eliminate some of the
most
burdensome requirements for the community banks that can least afford
the drain on resources, and who generally are rated Satisfactory,
anyway.
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 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.
Sincerely,
Ricci S. Aquilani
Vice President
Clinton National Bank
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