|
SOY CAPITAL BANK AND TRUST
September 15, 2004
Mr.
Robert E. Feldman,
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit
Insurance Corporation
550 17th St. NW
Washington, DC 20429
Dear Mr. Feldman:
As a community banker, I join my fellow community 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 alleviate unnecessary paperwork and
examination burden without weakening our commitment to reinvest in
our communities. Reinvesting in our communities is something we do
everyday as a matter of good business. My community bank will not
long survive if my local community doesn't 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, community banks would
continue to be examined to ensure they lend to all segments of their
communities, including low and moderate income individuals and
neighborhoods.
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
community banks 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. Community banks and 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 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 community banks pursue community development activities that meet
the local community's needs and utilize the bank's strategic strengths.
Similarly, the proposal will help rural banks meet the special needs
of their communities by expanding the definition of "community
development" so that it includes activities that benefit rural residents
in addition to low and moderate income individuals.
The FDIC's proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more and more community
banks will find they cannot sustain independent existence because of the
regulatory burden, and will opt to sell out. For many small towns and
rural communities, the loss of the local bank is a major blow to the
local community. By easing the regulatory burden, it will make it easier
for community banks to continue to provide committed service to local
communities that few other financial service providers are willing to
do.
Thank you for considering my views.
Sincerely,
Robert C. Smith President
Soy Capital Bank and Trust
|
