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FDIC Federal Register Citations
Bank of Glen Burnie
From: Rie Atkinson [mailto:RAtkinson@bogb.net]
Sent: Tuesday, October 19, 2004 1:05 PM
To: Comments
Subject: RIN # 3064-AC50
I strongly support the FDIC's proposal to increase the asset size of
banks eligible for the small bank CRA examination to $1 billion and eliminating
the holding company size requirement. However, I encourage the Board
to retain the small bank examination standard in its current form, without
the addition of new community development criteria.
Community banks are put at a competitive disadvantage since non-banks
and credit unions are not subject to the same CRA requirements, not to
mention the tax advantage afforded to credit unions. Regulatory burden
has increased greatly over the past few years with the passage of such
laws as the Gramm-Leach-Bliley Act, the USA PATRIOT Act, the FACT Act,
the Sarbanes Oxley Act and the Check 21 Act. While banks understand the
need for banking regulations, community banks find complying with them
especially burdensome. The FDIC's proposal to change the asset threshold
for the streamlined CRA exam to $1 billion is needed to help alleviate
some of the regulatory burden. Without such changes more and more community
banks will find they cannot sustain their independent existence due to
the crushing regulatory burden.
I have been the CRA Officer since 1995 when the FDIC adopted major amendments
to the CRA regulations including the $250,000 small bank definition.
At that time The Bank of Glen Burnie was considered a small bank and
has been until this year, 2004. I have personally seen the increase in
documentation, staffing and research required to comply with the large
bank criteria.
With all six of our branches within a 10 mile radius of the main office
and the operations building in the same block, we are still a community
bank with strong community ties. However, we are now required to compete
with the very large banks for investments and community development activities
in our area as well as provide the increased documentation required with
the large bank status. While our bank spends much more money to comply
with the regulations, we do not provide any more to our community than
we previously provided. The majority of our "community activities" do
not qualify under the stringent definition of "community development".
Another problem with the current large bank CRA exam is that the definitions
of "qualified investments" and "community development
loans" are too limited, often making them difficult to find. As
a result, many community banks have to invest in regional or statewide
investments to meet CRA requirements. These investments may benefit larger
areas of the state or region, but they actually take resources away from
the bank's local community. Community Development Loans are also difficult
to obtain in some areas. There are very few opportunities in our area
and the very large banks often out bid the smaller banks or fund the
entire loan in order to fulfill their CRA requirements, leaving the smaller
banks out of the projects.
It is important to understand that the streamlined CRA exam is not an
exemption from CRA. It is a more cost effective CRA exam. Banks subject
to the simplified CRA exam are still examined to ensure that they lend
to all segments of their communities, including low- and moderate-income
individuals and neighborhoods and small businesses. Eliminating the required,
and costly, annual reporting of small business and small farm loans in
no ways weakens a banks community involvement.
Eliminating the holding company size requirement would also reduce the
regulatory burden for many community banks. Small banks that are part
of holding companies with total bank or thrift assets of a $1 billion
or more are at a competitive disadvantage when examined under the large
bank requirements based on their holding company status. Such banks should
be measured with their peers, not measured against large banks.
We do not, however, support adding a mandatory community development
performance criterion for banks with assets greater than $250 million
and up to $1 billion as an additional component of small bank standards.
The proposal does not explain what the community development criterion
is or how it will be tested. Also, smaller institutions will continue
to have a difficult time competing with larger more established banks
for community development loans, investments and services.
In conclusion, while we strongly supports the FDIC's proposal to increase
the asset size of banks eligible for the small bank CRA examination to
$1 billion and eliminating the holding company size requirement, we do
not support the addition of new tests or criteria to the current small
bank criteria
Sincerely,
Yvonne "Rie" Atkinson
CRA Officer, AVP
The Bank of Glen Burnie
P. O. Box 70, Glen Burnie, MD
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