From: Philip Schmittou [mailto:fz4life@hotmail.com]
Sent: Thursday, October 07, 2004 7:45 PM
To: Comments
Subject: RE: RIN 3064-AC50
Philip Schmittou
4294 gibbs rd
danville, IN 46122
October 7, 2004
FDIC FDIC
Dear FDIC FDIC:
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:
I am a concerned citizen opposed to watering down CRA (Community
Reinvestment Act) requirements for mid-sized banks. CRA is vital for
increasing homeownership and economic development in lower-income
communities. Since the passage of the CRA in 1977, great progress has
been made in ending redlining and pushing banks to improve their lending
performance in underserved communities. Banks have improved their
outreach efforts, removed barriers in underwriting criteria that
excluded credit-worthy low- and moderate-income applicants, and created
loan counseling programs that assist first-time homebuyers.
There is still a long way to go, however, and the proposed changes to
the CRA do not help us get there. At a time when stronger curbs against
predatory lending and other unscrupulous practices are needed, this
proposal weakens the already inadequate regulations of banks. I cannot
understand how an administration hopes to promote community
revitalization and wealth building when its regulatory appointees
propose to dramatically diminish banks’ obligation to reinvest in their
communities.
I understand that banks with over $250 million in assets must be
tested on their number of loans, investments, and services to low- and
moderate-income communities. But your proposal would eliminate the
investment and service requirements for all banks with under $1 billion
in assets. This will result in significantly fewer loans and investments
in affordable rental housing, health clinics, community centers, and
economic development projects.
In the watered-down exam, you would allow mid-sized banks to choose
which community development activities they will undertake. Right now,
these banks must make community development loans, investments, and
services. Your proposed test allows banks to choose only one of the
three activities. The result will be less community development
activity.
As someone who has supported ACORN’s campaign to end the national
crisis of predatory lending, I am concerned that these changes would not
only do nothing to help solve this crisis, but would in fact make this
problem worse. No institution that makes or purchases predatory loans
should be given a satisfactory or better rating on a CRA exam. Nor
should institutions be given credit for giving high cost subprime loans
when borrowers’ credit warrants prime loans. Yet the proposed changes do
not incorporate these important improvements. Instead, they allow
thousands of more banks to escape their responsibility to provide good
loans in our communities. In too many instances, this void will be
filled by predatory lenders.
Your changes subvert CRA’s mandate to require lenders to meet
community needs. CRA is too important to be gutted. Please follow the
lead of the two other federal agencies that recognized this proposal’s
harm to underserved communities and withdraw this proposal.
Sincerely,
Philip Schmittou
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