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THE BABY FOLD 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:
As a member of the Financial Links for Low-Income People (FLLIP)
coalition, a statewide coalition of Illinois nonprofit organizations,
community groups, Individual Development Account providers, adult
educators, government agencies, financial institutions, and regulators,
I urge you to withdraw the proposed changes to the Community
Reinvestment Act (CRA) regulations. FLLIP is dedicated to expanding
financial education and asset-building opportunities for low-income
people.
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. If approved, over 97 percent of all banks in Illinois
would be subject to a watered-down CRA exam. The proposed change would
affect 70 banks in Illinois, including several banks that have
contributed to the FLLIP coalition's programs (Allstate Bank, Itasca
Bank & Trust, and Lisle Savings Bank). Those banks provided grants
ranging from $1000 to $25,000 and totaling almost $30,000. The grants
were used for activities including: community-based free financial
education classes; matching funds for Individual Development Accounts (IDAs)
to help low-income workers buy a house, start a business, go to college,
or buy a car; and scholarships for financial education train-the-trainer
sessions for nonprofit staff.
With fewer government and foundation resources available, nonprofit
financial education program providers and IDA program providers rely on
our bank partners for grants, in-kind donations, marketing and training
assistance, and access to convenient branches and affordable products
and services. We believe that the proposed rule would result in Illinois
nonprofits receiving fewer grants and resources for these needed
programs.
Banks frequently cite both CRA and business opportunities as factors
in their support
financial education and asset-building programs. An evaluation of the
FLLIP program by the University of Illinois documented that the program
helped graduates increase financial literacy, budget better, save more,
open bank accounts, make investments, and decrease use of check dashers
and payday loans. Thus, a decrease in support for financial education
and asset-building programs for low-income people would result in banks
missing opportunities to gain new customers and deposits.<.p>
The elimination of the service test would also have harmful consequences
for low- and moderate-income communities that lack mainstream banking
centers and affordable financial services. CRA. examiners would no
longer expect mid-size banks to maintain or build branches in low- and
moderate-income communities. Mid-size banks would have less incentive to
offer low-income consumers affordable checking and savings accounts and
other banking services, such as remittances used by immigrants to send
money home.
In place of the investment and service parts of the CRA exam, the
FDIC proposes to add a community development criterion under which
mid-size banks would have to engage in only one of three activities:
community development loans, investments, or services. In addition, you
propose to allow banks to receive CRA credit for activities in rural
areas that are not targeted to the low- and moderate-income populations
that CRA was intended to help. These proposed changes, too, would result
in fewer banks and fewer resources supporting financial education and
asset-building programs for low-income people.
For these reasons, I oppose the proposed changes to CRA and ask that
you withdraw the proposed rule.
Sincerely,
Kathleen Bush
Coordinator
Second Chance Renters Program The Baby Fold
cc: Dory Rand, FLLIP Coordinator, Sargent Shrivex National Center on
Poverty Law
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