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FDIC Federal Register Citations Housing Consortium of Everett and Snohomish County From: Susan Millan [mailto:housing.snohomish@verizon.net] October 20, 2004 Robert E. Feldman, Executive Secretary RE: Federal Deposit Insurance Corporation proposed rulemaking, RIN 3064-AC50 Dear Mr. Feldman: The Housing Consortium of Everett and Snohomish County opposes the proposed revisions to 12 CFR 345 regarding the Community Reinvestment Act (CRA). We also oppose the options outlined in the proposed rulemaking, but support adding rural areas to the definition of 'community development' with safeguards to ensure benefit to low-income and minority individuals. The proposed revisions, with the exception of adding rural areas to the 'community development' definition, would significantly undermine the intent of the Community Reinvestment Act, reduce private investment in community development and subvert the Administration's goals of alleviating homelessness and increasing home ownership. The value of the current regulations to low-income and minority persons and communities far outweighs the benefits to lending institutions of any regulatory relief. The Housing Consortium of Everett and Snohomish County is a non-profit, membership-based organization working to ensure that everyone has a safe, affordable place to call home. Our members represent non-profit housing developers; emergency and transitional housing providers; homeownership organizations; local governments; private and public funders and other individuals concerned about affordable housing in Snohomish County. The current CRA regulations have been essential to the successful development of affordable housing and other community development efforts throughout this county. The regulations have encouraged a broad range of lending institutions to participate in community development through purchasing Low Income Housing Tax Credits, providing creative financing and flexible underwriting, making grants to community development organizations and conducting outreach to low-income and minority communities. These community development activities have enabled many organizations to significantly leverage scarce public investments in affordable housing. Changing the definition of 'small bank' to the asset threshold of $1 billion would exempt 6 of our 25 banks in Snohomish County from the CRA standards for large banks, reducing the number of 'large banks' in this county by 24%. We appreciate and recognize those who would not diminish their community development activities as result of these changes, but remain concerned about banks who may. Most lending institutions did not participate in community development activities before CRA was implemented. We particularly oppose removing the holding company threshold from the definition of small bank. This will further reduce the number of institutions subject to the large bank test and allow holding companies to restructure simply to evade CRA compliance. While community banks have the interests of their communities at heart, they must answer to and follow the directives of their holding companies that are headquartered elsewhere. The addition of a mandatory community development criterion for banks with assets between $250 million and $1 billion will not mitigate the impact of increasing the small bank threshold. We are also opposed to the proposed criterion that would allow banks to 'perform well' by engaging in one or more community development activities rather than all of the activities. This will encourage institutions to narrowly focus their activities and ignore the broad range of community needs. Community development is multifaceted and efforts such as affordable housing, job creation and micro-enterprise development are interdependent. The effectiveness of banks' CRA activities will be undermined by allowing institutions to choose a limited range of community development activities. The Housing Consortium does support adding rural areas to the definition of 'community development' with safeguards to ensure benefit to low-income and minority individuals. Rural areas generally have relatively limited access to community development investments and services because few if any banks have rural headquarters. Furthermore, rural communities tend to have lower median incomes and their economies are subject to the vagaries of economies based on agriculture and natural resource extraction. These factors greatly complicate community development activities and make rural areas less attractive markets for lenders. Any definition of 'rural' should not be based solely on population. "Rural' should also include areas whose economies are dependent on traditional rural activities such as agriculture and natural resource extraction. Communities included in Metropolitan and Micropolitan Statistical Areas (MSA's) should not be categorically excluded from any definition of rural. MSA's are designated on the county level and often include small communities that rural in nature, based both on population and economy. Snohomish County has several such communities. We do appreciate the FDIC's efforts to ease administrative burdens on community banks, but have grave concerns about the proposal at hand. Again, we urge that the proposed regulations not be adopted. Thank you for this opportunity to comment. Respectfully Submitted, Susan Millan |
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| Last Updated 11/11/2004 | regs@fdic.gov | |