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FDIC Federal Register Citations
Office of Rural and Farmworker Housing
From: Brien Thane [mailto:brient@orfh.org]
Sent: Monday, October 18, 2004 12:29 PM
To: Comments
Cc: 'Marty Miller'
Subject: Community Reinvestment -- RIN 3064-AC50
October 18, 2004
Robert E. Feldman, Executive Secretary
AATN: Comments/Legal ESS
Federal Deposit Insurance Corporation
RE: Federal Deposit Insurance Corporation proposed rulemaking, RIN
3064-AC50
Greetings:
The Office of Rural and Farmworker Housing (ORFH) 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
stated 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.
ORFH is a 501(c)3 organization that develops affordable housing for
farm workers and other low-income residents of Washington State. The
current CRA regulations have been essential to the successful development
of affordable housing and other community development efforts throughout
this state. 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 31 banks in Washington State from the CRA
standards for large banks, reducing the number of ‘large banks’ in
this state by 74%. We are very concerned that this will result in many
of these banks curtailing or eliminating their community development
activities. 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 the local staff
of ‘community banks’ may well 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 under the guise of ‘market opportunities’ and ‘strategic
strengths’. 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.
ORFH 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.
Thank you for this opportunity to comment. We urge that the proposed
regulations not be adopted. ORFH does encourage adding a rural requirement
to the definition of community development with safeguards to ensure
benefit to low-income and minority individuals.
Martin Miller, Executive Director
Office of Rural and Farmworker Housing
1400 Summitview, #203
Yakima, WA
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