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FDIC Federal Register Citations
Community Housing Opportunities Corporation
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
Community Housing Opportunities Corporation (CHOC), a nonprofit affordable
housing development agency, urges you to withdraw your proposed changes
to the Community Reinvestment Act (CRA) regulations. CRA has been instrumental
in increasing homeownership, boosting small business and economic development
and increasing construction and permanent lending for affordable housing
development.
Under the current CRA regulations, banks with assets of at least $250
million are rated by performance evaluations that scrutinize their
level of lending, investing, and services to low- and moderate-income
communities. The proposed changes will eliminate the investment and
service parts of the CRA exam for state-charted banks with assets between
$250 million and $1 billion. In place of the investment and service
parts of the CRA exam, the FDIC proposes to add a community development
criterion. The community development criterion would require mid-size
banks with assets between $250 million and $1 billion to engage in
only one of three activities: community development lending, investing
or services. Currently, mid-size banks must engage in all three activities.
If enacted, 879 state-chartered banks with over $392 billion in assets
would become eligible for the streamlined and cursory exam. In total,
95.7 percent or more than 5,000 of the state-charted banks that the
FDIC regulates have less than $1 billion in assets. These 5,000 banks
have combined assets of more than $754 billion.
In California, there are 146 state-chartered banks located within urban
areas. 122 of these or 84% have assets up to $1 billion and would be
eligible for the streamlined exam. In rural California, there are 9
state chartered financial institutions with 8 of these having assets
up to $1 billion. If enacted, 89% of California's rural financial institutions
would become eligible for the streamlined exam.
The FDIC proposal would significantly harm community development activities
in rural areas. The proposal states that a bank's rural community development
activities could benefit any group of individuals instead of only low-
and moderate-income individuals.
The FDIC's proposal would eliminate the small business lending data reporting
requirement for mid-size banks. Mid-size banks with assets between $250
million and $1 billion will no longer be required to report small business
lending by census tracts or revenue size of the small business borrowers.
In sum, the FDIC’s proposal is directly opposite CRA’s statutory
mandate of imposing a continuing and affirmative obligation to meet community
needs. The proposed changes will dramatically reduce community development
lending, investing, and services. The proposal will particularly affect
rural areas least able to afford reductions in credit and capital. Eliminating
critical data on small business lending will also result in further reductions
to the amount and type of small business lending. The Federal Reserve
Board and the Office of the Comptroller of the Currency have recognized
the harm
this proposal would cause.
CRA is a vital reinvestment tool. If the FDIC refuses to reverse this proposed
course of action, we will ask that Congress halt your efforts.
Sincerely,
COMMUNITY HOUSING OPPORTUNITIES CORPORATION
Paul Ainger
Director of Development
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