FDIC Federal Register Citations

Connecticut Bankers Association

October 20, 2004

Mr. Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, D.C. 20429

Re: RIN Number 3064-AC50

Dear Mr. Feldman:

This letter is written to comment on the proposed amendments to the Community Reinvestment Act ("CRA") regulations on behalf of the seventy-two member banks of the Connecticut Bankers Association (the "CBA"). This proposal would directly impact twenty-one of our member banks whose current asset size is between $250 million in assets up to $1 billion. In addition, this change will soon impact another six of our member banks currently just under the $250 million asset threshold and eventually twenty other member community banks as they grow in asset size in the years ahead.

The CBA strongly supports the FDIC's proposed changes to the Community Reinvestment Act examination regulations that would amend the definition of a small institution to be a bank that is under $1 billion in assets. To have a $500 million asset sized institution subject to the same rules as that of a $50 billion asset sized bank is unreasonable. As you are well aware, the FDIC is in the process of reviewing the impact of regulatory burden on the industry, adopting this proposal would be a great first step.

At the request of our member banks directly impacted by this proposal, please note the CBA's positions on the following items:

We strongly support the FDIC's proposal to raise the threshold for the streamlined small bank CRA examination to $1 billion without regard to the size of the bank's holding company.

We believe that this proposal will greatly alleviate unnecessary paperwork and examination burden without weakening the community banker's commitment to their communities. Connecticut's community banks by nature are committed to their communities as local business is the best type of banking business. Expanding the eligibility for the streamlined CRA exam will free up valuable human and financial resources that can be redirected by bankers to better serve their community's needs.

We support the addition of a community development criterion to the small bank examination for larger community banks, but we believe that the FDIC should adopt its original $500 million threshold without a Community Development ("CD") criterion. The new CD criterion should be applied only to banks greater than $500 million to $1 billion in assets.

We strongly oppose making the CD criterion a separate test from the bank's overall CRA evaluation. Such differentiation creates the impression that CD lending is different from the providing of credit to the entire community.

We strongly support the FDIC's proposal to change the definition of "community development" from only focusing on low and moderate-income area residents to include rural residents. This change will go a long way towards eliminating the current distortions in the regulations that result in a small rural bank being told to invest in regional affordable housing bonds for an urban area not in the bank's community.

In closing, it is important to note that the streamlined CRA exam is not an exemption from CRA, but a more cost effective and efficient way to examine a community bank's compliance efforts to meet not only the letter, but the spirit of CRA regulations. Thank you for giving us the opportunity to submit these comments. Please feel free to contact me if you have any questions on the contents of this letter.

Very truly yours,

Lindsey R. Pinkham

Senior Vice President & Secretary