September 15, 2004
Mr. Robert Feldman, Executive Secretary
Attention Comments/Legal ESS
Federal Deposit Insurance Corp,
550 17th Street NW
Washington DC, 20429
Re: RIN 3064-AC50
Dear Mr. Feldman;
The purpose of this letter is to discourage your plan to modify the
threshold for CRA examination to dilute Community Reinvestment Act
requirements for institutions with assets less than $1B. The reduced
requirements would include modification of testing requirements on the
number of investments and services in low and moderate-income areas. The
second is to allow mid sized banks reduce their community development
activities.
This ruling would apply to all locally headquartered banks in San
Diego. It would only exclude the very large national banks. It would
create an unequal playing field in the banking industry in this region.
It would allow for market domination in major geographical areas of the
County for specific products and services. It would exclude ethnic and
lower income residents from basic banking services and thereby be in
direct violation of the federal Community Reinvestment Act and quite
possibly the Fair Housing Act.
The effect is to allow smaller banks to behave the way that they have
traditionally been behaving in terms of CRA compliance. They
traditionally display an acute disregard for their obligation to the
larger community. Branches are almost exclusively in suburban, wealthier
communities. The smaller banks very seldom participate in regional
consortia or directly offer products or access to simple access to basic
banking services.(1)
Your decision will legitimatize the exclusionary lending policies of
these institutions.
Smaller banks in San Diego are a growth industry. Over the ten years
I have observed CRA activity Iocally I have seen several new, small
banks emerge and get sold to larger banks. It is an industry here. We
grow banks for larger, multi- national institutions. This is part of the
reason that these banks eschew CRA. It may interfere with their purchase
by larger banks. The small banks exist not for the benefit of the
consumer but rather for a select number of shareholders. CRA regulations
(however limited) are the only link to the larger community required by
a bank charter.
The City/ County Reinvestment Task Force (RTF) is chartered by the
City Council and County Board of Supervisors to monitor lending
practices and develop strategies for reinvestment in the region. It was
established by joint resolution in 1977 and is Co-Chaired by the City
Council and the County Board of Supervisors. It has an extraordinary
record of success in facilitating access to capital in underserved
markets generating billions of home loans, small business loans,
affordable housing and community investments ($1.9B in 2003). Through
local attention to the CRA and long term strategic planning and analysis
the CRA has become one of the primary tools for community stability and
revitalization in the region. These accomplishments occur because of the
"partnership' that has been forged between community, lenders and
government. The partnership depends on each party bringing its full
authority and potential to the work.
Government has provided much protection and risk diversion with
affordable housing, investments and small micro lending efforts. This
was offered with the confidence that the lenders would equally commit.
The RTF has done constant and disciplined assessment of credit access
and through dialogue, face to face, many new and innovative solutions
have been created, so much so that a thriving and profitable "industry"
has emerged in this region focused on economically healthy communities.
We urge you to rescind your intent to reduce CRA related policies
toward smaller banks. We must include these smaller banks in a market
beneficial to them and their customer base; and encourage recognition
that they are part of a larger community and can contribute to the
region's overall economic growth.
Sincerely,
Lynn Baker Hastings,
North County Public Member,
San Diego City/County Reinvestment Task Force
(I Countywide Credit Needs Assessment, Steve Bouton Ph.D, Economic
Research Associates, 2001; San Diego Mortgage Lending Five Year Review,
1997-2002.
cc: National Community Reinvestment Coalition
Congressman Bob Filner Congresswoman Susan Davis
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