September 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
I am a concerned
citizen or community organization opposed to watering
down the Community
Reinvestment
ACT (CRA) requirements for mid-sized banks.
CRA is vital for increasing homeownership and economic development
in lower income communities. However, your proposed changes will
halt the progress that has been made.
I understand
that banks with over $250 million in assets must be tested on their
number of loans, investments, and services to low
and moderate-income communities. But your proposal would eliminate
the investment and service requirements for all banks with under
$1 billion in assets. This will result in significantly fewer loans
and investments in affordable rental housing, health clinics, community
centers, and economic development projects.
In the watered-down exam, you would allow mid sized banks to choose
which community development activities they will undertake. Right
now, these banks must make community development loans, investments
and services. Your proposed test allows banks to choose only one
of the three activities. The result will be less community development
activity.
You also propose that community development activities in rural
areas should benefit any group of individuals instead of only low
and moderate-income individuals. But this will allow banks to cherry-pick
and focus on affluent residents of rural areas rather than the lower
income consumers CRA targets. Finally, you would also eliminate publicly
available data on the small business lending of mid-sized banks.
Without data, community groups and citizens cannot hold banks accountable
for lending to small business in their neighborhoods.
In Michigan, the FDIC oversees 107 institutions, controlling $31
billion in assets. Overall, 93% have under $1 billion in assets and
22% have between $250 million and $1 billion in assets and would
be effected by the proposed changes in CRA regulations. One hundred
percent of assets in rural Michigan are controlled by institutions
with less than $1 billion and would therefore be subject to abbreviated
CRA exams. Eighty-nine percent of the institutions in urban areas
have less than $1 billion in assets. If the proposed changes to CRA
are adopted by the FDIC, 46% of the assets in urban Michigan would
not be subject to the current level of scrutiny under CRA.
Your changes
directly oppose CRA's mandate to require lenders to meet community
needs. CRA is too important to be gutted. Please drop
your proposal like the two other federal agencies that recognized
its harm to underserved communities.
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