WOMEN'S INITIATIVE FOR SELF EMPLOYMENT
September 10, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
Women’s Initiative for Self Employment urges you to withdraw
your proposed changes to the Community Reinvestment Act (CRA) regulations.
CRA has been instrumental in increasing homeownership, boosting economic
development, and expanding small businesses in the nation’s
immigrant, low- and moderate-income, and people of color communities.
Under the current CRA regulations, 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 state-charted banks with assets
between $250 million and $1 billion. In place of the investment and
service parts of the CRA exam, the FDIC proposes to add a community
development criterion. The community development criterion would
require mid-size banks with assets between $250 million and $1 billion
to engage in only one of three activities: community development
lending, investing or services. Currently, mid-size banks must engage
in all three activities.
If enacted, 879 state-chartered banks with over $392 billion in
assets would become eligible for the streamlined and cursory exam.
In total, 95.7 percent or more than 5,000 of the state-charted
banks that the FDIC regulates have less than $1 billion in assets.
These 5,000 banks have combined assets of more than $754 billion.
In California, there are 146 state-chartered banks located within
urban areas. 122 of these or 84% have assets up to $1 billion and
would be eligible for the streamlined exam.
In rural California, there are 9 state chartered financial institutions
with 8 of these having assets up to $1 billion. If enacted, 89% of
California's rural financial institutions would become eligible for
the streamlined exam. The FDIC proposal would significantly harm
community development activities in rural areas. The proposal states
that a bank's rural community development activities could benefit
any group of individuals instead of only low- and moderate-income
individuals.
The FDIC's proposal would eliminate the small business lending data
reporting requirement for mid-size banks. Mid-size banks with assets
between $250 million and $1 billion will no longer be required to
report small business lending by census tracts or revenue size of
the small business borrowers.
In sum, the FDIC’s proposal is directly opposite CRA’s
statutory mandate of imposing a continuing and affirmative obligation
to meet community needs. The proposed changes will dramatically reduce
community development lending, investing, and services. The proposal
will particularly affect rural areas least able to afford reductions
in credit and capital. Eliminating critical data on small business
lending will also result in further reductions to the amount and
type of small business lending. The Federal Reserve Board and the
Office of the Comptroller of the Currency have recognized the harm
this proposal would cause.
CRA is a vital reinvestment tool. If the FDIC refuses to reverse
this proposed course of action, we will ask that Congress halt your
efforts.
Sincerely,
Julie Abrams
Executive Director
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