Economic
Justice Project, New York Law School
From:
rdm12@optonline.net [mailto:rdm12@optonline.net]
Sent: Monday, April 05, 2004 10:33 PM
To: regs.comments@occ.treas.gov; regs.comments@federalreserve.gov;
Comments; regs.comments@ots.treas.gov
Subject: Comments on Proposed Revisions to the CRA Regulations
Richard D. Marsico
Professor of Law
Director, Economic Justice Project
New York Law School
47 Worth St.
New York, NY 10013
April 5, 2004
Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E. St. SW
Washington, DC 20219
Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Ave., NW
Washington, DC 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20249
Regulation Comments, Attention: No. 2004-04
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street NW
Washington, DC 20552
Dear Federal Bank and Thrift Regulatory Agencies:
I am a professor of law at New York Law School where I am the
director of the Economic Justice Project. I am also a member of the
National Community Reinvestment Coalition (NCRC). I submit these
comments about the agencies’ proposed amendments to the Community
Reinvestment Act (CRA) regulations. I strongly oppose the agencies’
proposal to increase the asset threshold for the streamlined CRA
examination from $250 million to $500 million. This proposal would
deprive significant portions of the nation of needed community
development loans and investments and retail banking services without
providing a significant benefit to the public. In addition, while it is
appropriate for the agencies to regulate predatory lending through the
CRA, the proposal does not go far enough. Finally, I support the
agencies’ proposal to disclose a bank’s small business loans by census
tract.
The agencies’ proposal to increase the asset threshold for the
streamlined CRA examination from $250 million to $500 million would
excuse approximately 1,100 banks nationwide from scrutiny of their
community development investments and their retail banking services. The
agencies’ national perspective on the impact of their proposal--that it
reduces only slightly the total value of banking assets under the large
bank CRA exam--ignores the fact that the proposal will exempt from the
investment and service test a higher percentage of assets in many
states, and in rural areas in particular. According to data submitted to
the agencies by NCRC, banks that would be exempt from investment and
service tests control 4.32% of banking assets nationwide. However, such
banks control more than this percentage of bank assets in 37 states.
Such banks control more than 10% of banking assets in 20 states, and
control more than 20% of assets in 5 states: Arkansas (20.61%); Colorado
(20.78%); Mar yland (21.43%); Vermont (24.00%); and Idaho (55.46%). In
rural areas, banks with $250 million to $500 million in assets control
18.80% of assets nationally. This means that 18.08% of banking assets in
rural areas would not be subject to the investment and service tests.
Additionally, banks in rural areas that would be exempt from the
investment and service tests control more than 18.80% of assets in 20
states, including more than 50% of assets in Idaho (50.05%); Utah
(51.08%); and Vermont (53.99%).
The agencies’ proposed standard for considering predatory lending is
woefully inadequate on several levels. First, it does not cover many
predatory practices, including packing fees into mortgage loans, high
prepayment penalties, loan flipping, and mandatory arbitration clauses.
Second, it only covers real estate-related loans made by the bank in its
assessment area. This gives banks a free pass to make predatory loans
outside of their assessment areas, through affiliates, and to other
types of borrowers. Third, it does not include secondary market
activities of banks. Finally, it does not affect abusive subprime
lending activities by banks, including targeting low-income and
predominantly minority communities for subprime loans.
Finally, the agencies’ proposal to report the specific census tracts
that received a small business loans will improve the quality of data
available. Improvement in the quality of publicly available lending data
have traditionally resulted in lending increases to the relevant group.
The agencies should make sure to make use of this expanded data in their
CRA performance evaluations.
Thank you for this opportunity to submit comments.
Yours truly,
Richard Marsico |
