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YSLETA DEL SUR PUEBLO
September 23, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
The Ysleta del Sur Pueblo urges you to withdraw your proposed changes
to the Community Reinvestment Act (CRA) regulations. CRA has been
instrumental in increasing homeownership, boosting economic development,
and expanding small businesses in the nation's minority, immigrant, and
low- and moderate-income communities. Your proposed changes are contrary
to the CRA statute and Congress' intent because they will slow down, if
not halt, the progress made in community reinvestment, including Indian
country. The changes proposed for rural communities will
disproportionately affect tribes and Native Americans living in tribal
areas.
To this point, Native Americans living on reservations are the most
unbanked population in the United States. The Navajo Nation, for
example, has 5 bank branches in total for a population of 250,000 people
living in an area the size of West Virginia. You can see the same or
greater number of branches in a single block in our Nation's capital.
The proposed changes would only serve to worsen banking services to
tribes. These changes, which would make smaller banks less accountable
for their community reinvestment activity, alarm us, as banks are
finally waking up to the investment opportunities in Indian country.
Indian country has made strides with the help of banks in the mortgage
arena and, we believe, that the strength of the current law has been
instrumental to this development. For example, we saw conventional
mortgage activity increase from 2001 through 2003. In addition, the
recent strides in economic development in Indian country will be lost if
banks aren't required to invest. The following data point up the severe
continuing needs in Indian country that requires a strong CRA.
According to the GAO, the rate of homeownership for Native Americans
living on reservations is just 33 percent, or half that of the general
population and substantially lower than that of other minority groups.
In addition, Native Americans are four times more likely than the
average American family to live in substandard housing. (Fannie Mae
data, Testimony, Pattye Greene, May 3, 2004, House Financial Services
Committee) Overcrowding has been documented in the NAIHC study "Too Few
Rooms..." (2001) reporting as many as 25 or even 30 people living in
deplorable conditions under one roof in a 2- or 3-bedroom house.
It is well known that smaller banks, those primarily regulated by the
FDIC, are more likely to serve rural populations, so these provisions
are disturbing to populations such as ours who are entirely rural. With
the current Administration seeking to
expand minority homeownership, these measures will certainly not help
and very likely halt the recent gains in homeownership that we have seen
taking place on tribal lands.
W'e believe the proposed changes will thwart the Administration's
goal of creating 5.5 million new minority homeowners by the end of the
decade. Since FDIC Chairman Powell, a Bush Administration appointee, is
proposing the changes, the sincerity of the Administration's commitment
to expanding homeownership and economic development is called into
question. How can an administration hope to promote community
revitalization and wealth building when it proposes to dramatically
diminish banks' obligation to reinvest in their communities?
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
banks to offer community development loans, investments or services.
The community development criterion would be seriously deficient as a
replacement for the investment and service tests. Mid-size banks with
assets between $250 million and $1 billion would only have to engage in
one of three activities: community development lending, investing or
services. Currently, mid-size banks must engage in all. three
activities. Under your proposal, a mid-size bank can now choose a
community development activity that is easiest for the bank instead of
providing an array of comprehensive community development activities
needed by low- and moderate-income communities.
The proposed community development criterion will result in
significantly fewer loans and investments in affordable rental housing,
Low-Income Housing Tax Credits, community service facilities such as
health clinics, and economic development projects. It will be too easy
for a mid-size bank to demonstrate compliance with a community
development criterion by spreading around a few grants or sponsoring a
few homeownership fairs rather than engaging in a comprehensive effort
to provide community development loans, investments, and services.
Your proposal would make 879 state-chartered banks with over $392
billion in assets eligible for the streamlined and cursory exam. In
total, 95.7 percent or more than 5,000 of the state-charted banks your
agency regulates have less than $1 billion in assets. These 5,000 banks
have combined assets of more than $754 billion. The combined assets of
these banks rival that of the largest banks in the United States,
including Bank of America and JP Morgan Chase. Your proposal will
drastically reduce, by hundreds of billions of dollars, the bank assets
available for community development lending, investing, and services.
The elimination of the service test will also have harmful consequences
for low- and moderate-income communities. Ysleta del Sur Pueblo-Housing
Department presently has a waiting list of 197 tribal members waiting
for low-and-moderate Income housing. CRA examiners will no longer
expect mid-size banks to maintain and/or build bank branches in low- and
moderate-income communities. Mid-size banks will no longer make
sustained efforts to provide affordable banking services, and checking
and savings accounts to consumers with modest incomes. Banks eligible
for the FDIC proposal with assets between $250 million and $1 billion
have 7,860 branches. All banks regulated by the FDIC with assets under
$1 billion have 18,811 branches. Your proposal leaves banks with
thousands of branches "off the hook" for placing any branches
in low- and moderate-income communities.
Another destructive element in your proposal is the elimination of
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. Without data on
lending to small businesses, it is impossible for the public at large to
hold the mid-size banks accountable for responding to the credit needs
of minority-owned, women-owned, and other small businesses. Data
disclosure has been responsible for increasing access to credit
precisely because disclosure holds banks accountable. Your proposal will
decrease access to credit for small businesses, which is directly
contrary to CRA's goals.
Lastly, and perhaps most devastating to Native Americans living in
tribal areas, you propose that community development activities in rural
areas can benefit any group of individuals instead of only low- and
moderate-income individuals. Since banks will be able to focus on
affluent residents of rural areas, your proposal threatens to divert
community development activities away from the low- and moderate-income
communities and consumers that CRA targets. Your proposal for rural
America merely exacerbates the harm of your proposed streamlined exam
for mid-size banks. Your streamlined exam will result in much less
community development activity. In rural America, that reduced amount of
community development activity would earn CRA points even if it benefits
affluent consumers and communities. What's left over for low- and
moderate-income rural residents are the crumbs of a shrinking CRA pie of
community development activity.
In sum, your proposal is directly opposite CRA's statutory mandate of
imposing a continuing and affirmative obligation to meet community
needs. Your proposal will dramatically reduce community development
lending, investing, and services. You compound the damage of your
proposal in rural areas, which are least able to afford reductions in
credit and capital. You also eliminate critical data on small business
lending. Two other regulatory agencies, the Federal Reserve Board and
the Office of the Comptroller of the Currency, did not embark upon the
path you are taking because they recognized the harm it would cause.
If your agency is serious about CRA's continuing and affirmative
obligation to meet credit needs, you would be proposing additional
community development and data reporting requirements for more banks
instead of reducing existing obligations. A mandate of affirmative and
continuing obligations implies expanding and enlarging community
reinvestment, not significantly reducing the level of community
reinvestment.
CRA is too vital to be gutted by regulatory fiat and neglect. We hope
that the FDIC, which earlier this year had the vision to hold a
conference on the "unbanked," will not now introduce changes detrimental
to the most "unbanked" population of all.
Sincerely,
Annette Ruiz
Secretary/Collection Officer
Ysleta del Sur Pueblo
El Paso, TX 79917 |
