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CABRILLO ECONOMIC DEVELOPMENT CORPORATION Mr. Robert Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
RIN Number 3064-AC50
Dear Mr. Feldman:
I am writing on behalf of Cabrillo Economic Development Corporation (CEDC)
to voice opposition to the Federal Deposit Insurance Corporation
(FDIC's) proposed changes to the Community Reinvestment Act (CRA)
regulations. In particular, we believe raising the Basset threshold for
small banks to $1 billion would severely undermine partnerships that
community based organizations have developed with banks.
CEDC is a 23 year old housing nonprofit serving Ventura and Santa
Barbara counties. We also operate a Homeownership Center where we
provide counseling workshops, and loan mortgage services. We service
both rural and urban areas. We leverage private dollars in order to
create new homeowners, revitalize distressed communities, and build
single family and multi-family housing for low- to moderate-income
families.
Since 1981 we have developed over 800 new units of housing. These
impacts could not have been achieved without the significant
participation of our bank partners – as investors, lenders and service
providers.
Banks are vital partners in our work and the incentive provided by
CRA has been instrumental in
building and maintaining these partnerships. CRA provides an incentive
for financial institutions
to reach out and develop relationships and is a critical force in
keeping banks committed to
providing services and products designed specifically for low and
moderate income consumers. While some banks might continue to
serve low and moderate income markets without the incentive of CRA, we
firmly believe that most institutions would not.
CEDC and our bank partners have used CRA to leverage and expand the
availability of bank products and services in low and moderate
communities. Our banking partners know that CEDC is a solid business
partner and they are attracted to the opportunity to invest in programs
designed to serve emerging markets that most conventional banks
overlook. CEDC also provides Homeownership Center services and products
that allow non-traditional borrowers to become homeowners and access the
marketplace.
Current CRA regulations require that banks with assets of $250
million or more must satisfy CRA performance evaluations that look at
the lending, investing, and services provided by the bank to low and
moderate income communities in their service area. Small institutions,
defined under current regulations as banks with less than $250 million
in assets, are subject to a streamlined CRA exam that does not include
either an investment test or a services test.
Under the proposed changes the asset threshold for small banks would
increase from $250 million to $1 billion, thus allowing more
institutions to take advantage of the streamlined CRA exam.
Under the new regulations, 95 percent of the state chartered banks
regulated by the FDIC would not be subject to the investment or services
test. The proposed rule would have an even deeper impact in rural
communities where 99 percent of the FDIC regulated banks have assets of
less than $1 billion. This would have a devastating impact on investment
in the communities we serve and on the community development industry as
a whole.
Without the incentive of CRA, many banks will discontinue or
drastically reduce the level of investment and services they provide to
low and moderate income individuals and communities. The FDIC's proposal
to replace the investments and services test with a new community
development test for institutions between $250 million and $1 billion is
not sufficient to stimulate new investment. The proposal would only
require that these institutions engage in one of the three activities –
lending, investing or services – and we firmly believe that all three
activities are vital and banks should be required to engage in these
activities throughout their service area.
CEDC also opposes the FDIC proposal that any community development
activity in a rural area be deemed as a qualified CRA activity. Though
CEDC shares FDIC's concern that rural areas need greater access to
financial capital and services, it is clear the new proposed regulations
ignore the needs of low and moderate income individuals and communities.
Many rural nonprofits are already struggling with the loss of small
and medium locally-controlled banks as the banking industry is
consolidated through bank mergers. This trend has had a significant
impact on low and moderate income communities and resulted in the loss
of community lending programs and local loan officers and a reduction in
community development resources as grant-making and lending decisions
are made at bank headquarters in urban centers which are far removed
from their rural customers.
CRA provides one of the few tools by which community based
organizations can influence the merger process and we will oppose
regulatory changes designed to allow more institutions to bypass the
full CRA exam process.
CEDC strongly recommends that the proposed rule be withdrawn and that
no action be taken on the current regulations governing CRA.
Sincerely,
Rodney Fernandez
Executive Director
CEDC
11011 Azahar St
Saticoy, CA 93004 |
