FDIC Federal Register Citations

September 16, 2004

Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Re: Community Reinvestment, RIN # 3064-AC50, Expansion of Eligibility for the Streamlined CRA Exam

As a Florida banker, I join my fellow bankers throughout the nation in strong support of the FDIC's proposal to increase the asset size limit of banks eligible for the streamlined small-bank CRA'examination. I also strongly support the elimination of the separate holding company qualification.

The proposal will greatly alleviate unnecessary paperwork and examination burden without weakening our commitment to reinvest in our communities. Reinvesting in our communities is something our industry does everyday as a matter of good business. My bank will not long survive if my local community does not thrive, and that means my bank must be responsive to community needs and promote and support community and economic development.

Making it less burdensome to undergo a CRA exam by expanding eligibility for the streamlined exam will not change the way my bank does business. In fact, it will free up human and financial resources that can be redirected to the community and used to make loans and provide other services.

It is important to remember that the streamlined CRA exam is not an exemption from CRA. It is a more cost effective and efficient CRA exam. Banks subject to the simplified CRA exam are still fully obligated to comply with CRA. Just as now, banks would continue to be examined to ensure they lend to all segments of their" communities, including low and moderate-income individuals and'neighbofhoods: It just does not make sense and is inequitable to evaluate a $500 million or $1 billion bank using the same exam procedures as for $100 billion or $500. billion bank.

One of the problems with the current large bank CRA exam is that the definition of "qualified investments" is too limited, and qualified investments can be difficult to find. As a result, many banks (especially those in rural areas) have to invest in regional or statewide mortgage bonds or housing bonds and the like to meet CRA requirements. These investments may benefit other areas of the state or region, but they actually take resources away from the bank's local community. Communities would be better off if the banks could truly reinvest those dollars locally to support their own local economies and residents.

For this reason, I find that the FDIC's proposed community development requirement for banks between $250 million and $1 billion is more flexible and more appropriate than the large bank investment test. The advantage to this proposal is that it continues to focus on community development, but considers investments, lending and services. It would let banks pursue community development activities that both meet the local needs and make sense in light of the bank's strategic strengths.

The FDIC's proposed changes to CRA are needed to help alleviate regulatory burden. Without changes such as this, more and more banks like mine will find they cannot sustain independent existence because of the crushing regulatory burden, and will opt to sell out. For many small towns and rural communities, the loss of a bank is a major blow to the community. By easing regulatory burden, it will make it easier for banks like mine to continue to provide committed service to communities that few other financial service providers are willing to do.

Thank you for considering my views.

Robert L. Bonnet
President