FDIC Federal Register Citations

October 20, 2004

Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Re: Proposed Changes to the Community Reinvestment Act Regulation
RIN 3064-XXXX

Dear Mr. Feldman:

The Idaho Department of Finance (Department) appreciates the opportunity to comment on the Federal Deposit Insurance Corporation’s (FDIC) proposed revisions to the regulations implementing the Community Reinvestment Act (CRA). The Department supports the FDIC’s proposals to revise the definition of “small bank” from one with total assets of less than $250 million to one with assets up to $1 billion, and to expand the definition of “community development” to better address activities in rural areas.

Idaho’s thirteen state-chartered, non-member banks range in asset size from approximately $18 million to $600 million. Under the proposal, all of the Idaho communities that are served by these institutions, as well as the institutions, would benefit from their classification as small banks. As their primary regulator, we hear first-hand from Idaho’s bankers about the dramatically increasing resources they must allocate to increasingly complex regulations. The Department strongly believes in reducing those regulatory burdens on our community banks. By providing that they will be classified as small banks until the $1 billion threshold is crossed, these banks will be subject to the streamlined CRA test, with or without the proposed community development criterion, that focuses primarily on lending. The streamlined CRA test will allow our community banks to direct their resources to community-based lending activities, consistent with the purpose of CRA to make certain that banks help meet the credit needs of the communities they serve, and thereby better serving their communities.

Idaho’s banks currently do an admirable job of serving their communities. The following are recent examples of activities where our banks have supported their communities:
• provided a loan to a local city Redevelopment Agency to participate in the improvement of an older section of the community,
• established credit relationships with homebuilders who specialize in starter homes and affordable housing,
• been involved as a lender to a local community non-profit corporation that provides funding to small businesses,
• participated with a state housing and finance association to offer reduced rates on mortgage loans to low- and moderate-income families,
• participated with a rural development guarantee loan program to help low-income individuals purchase homes in rural areas,
• participated in the Home$tart Savings Program to help low- and moderate-income borrowers receive money towards the purchase of a home,
• originated loans to a non-profit organization that provides rehabilitation facilities for adults with disabilities,
• originated loans to a non-profit organization that provides emergency shelter and other services to individuals and families facing homelessness,
• served as a member of the Idaho Community Reinvestment Corporation, participating with other Idaho financial institutions in funding qualified community development lending activities,
• participated in home buyer education classes through a neighborhood housing service,
• invested in general obligation bonds benefiting a school district where a majority of students receive free or subsidized lunches, and
• invested in general obligation bonds helping fund construction of a public swimming pool and park facility in a moderate-income area.

There is no reason to believe that the support provided Idaho’s communities by their banks would lessen if the “small bank” threshold were increased.

We also support increased recognition of investments in, and services to rural communities for CRA purposes, and believe the revision would promote critically important economic development in rural areas.

The proposed amendments acknowledge changes that have occurred in the financial services industry since the enactment of the regulations implementing the CRA. We believe the proposal strikes a balance between reduced regulatory burdens on community banks and the responsibility they share to provide access to credit in their communities. The proposal would also work toward achieving a consistent approach to CRA among the federal regulators. Inasmuch as the Office of Thrift Supervision has issued a final rule defining “small” savings associations as those with total assets of less than $1 billion, a similar definition adopted by the FDIC would be one step toward eliminating disparity among the charters.

Thank you for your consideration and the opportunity to submit comments on the proposed revisions to the regulations. Please let me know if there is any further information we can provide.

Sincerely,
GAVIN M. GEE
Director

cc: Honorable Dirk Kempthorne, Governor
Honorable Mike Crapo, U.S. Senator
Honorable Larry E. Craig, U.S. Senator
Honorable C.L. “Butch” Otter, U.S. Representative
Honorable Mike Simpson, U.S. Representative
Idaho Bankers Association
Idaho Community Bankers Association
Conference of State Bank Supervisors