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DES PLAINES
NATIONAL BANK
Mr. Robert E. Feldman Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington DC 20429
Re: RIN Number 3064-AC50: FDIC Proposed Increase in the Thresh}old
for the Small Bank CRS Streamlined Examination
Dear Sir or. Madam:
I am Margaret Higgins of Des Plaines National Bank, located in Des
Plaines, IL a northwest suburb of Chicago with a population of
approximately 59,000 residents. Des Plaines National Bank holds $330
million in assets and is already subject to large bank CRA exams, but
has not yet had a large bank exam. I am writing to strongly support the
FDIC's proposal to raise the threshold for the streamlined small bank
CRA examination to $1 billion without regard to the size of the bank's
holding company. This would greatly relieve the regulatory burden
imposed on many small banks such as my own under the current regulation,
which are required to meet the standards imposed on the nation's largest
$1 trillion banks. I understand that this is not an exemption from CRA
and that my bank would still have to help meet the credit needs of its
entire community and be evaluated by my regulator. However, I believe
that this would lower my current regulatory burden by the many man hours
needed to prepare and go through an examination.
I also support the addition of a community development criterion to
the small bank examination for larger community banks. It appears to be
a significant improvement over the investment test. However, I urge the
FDIC to adopt its original $500 million threshold for small banks
without a CD criterion and only apply the new CD criterion to community
banks greater than $500 million up to $1 billion. Banks under $500
million now hold about the same percent of overall industry assets as
community banks under &250 million did a decade ago when the revised CRA
regulations were adopted, so this adjustment in the CRA threshold is
appropriate. As FDIC examiners know it has proven extremely difficult
for small banks, especially those in rural areas, to find appropriate
CRA qualified investments in their communities. Many small banks
have had to make regional or statewide investments that are extremely
unlikely to ever benefit the banks' own communities. That was certainly
not the intent of Congress when it enacted CRA.
An additional reason to support the FDIC's CD criterion is that it
significantly reduces the current regulation's "cliff effect." Today,
when a small bank goes over $250 million, it must completely reorganize
its CRA program and begin a massive new reporting, monitoring and
investment program. If the FDIC adopts its proposal, a state nonmember
bank would move from the small bank examination to an expanded but still
streamlined small bank examination, wit the flexibility to mix Community
Development loans, services and investments to meet the new CD
criterion. This would be far more appropriate to the size of the bank,
and far better than subjecting the community bank to the same large bank
examination that applies to $1 trillion banks. This more graduated
transition to the large bank examination is a significant improvement
over the current regulation.
I strongly oppose making the CD criterion a separate test from the
bank's overall CRA evaluation. For a community bank, CD lending is not
significantly different from the provision of credit to the entire
community. The current small bank test considers the institution's
overall lending in its community. The addition of a category of CD
lending (and services to aid lending and investments as a substitute for
lending) fits well within the concept of serving the whole community. A
separate test would create an additional CD obligation and regulatory
burden that would erode the benefit of the streamlined account.
In conclusion, I believe that the FDIC has proposed a major
improvement in the CRA regulations, one that much more closely aligns
the regulations with the Community Reinvestment Act itself, and I urge
the FDIC to adopt its proposal, with the recommendations above. I will
be happy to discuss these issues further with you, if that would be
helpful.
Sincerely,
Margaret Higgins
Des Plaines National Bank
701 Lee Street
Des Plaines, Illinois 60016
Phone (847) 954-3990 Fax (847) 954-3940
CC: The Honorable John D. Hawke, Jr.
Comptroller of the Currency
Independence Square,
250 E. Street, S.W.
Washington, DC 20219-0001
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