FDIC Federal Register Citations

Michael Tucker
c/o GCB, P.O. Box 1345
Greenfield, MA 01302

October 6, 2004

Robert E. Feldman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Dear Robert Feldman:

I am President and CEO of Greenfield Co-operative Bank, a $200 million community bank. On behalf of the employees, officers and board of Greenfield Co-operative Bank, I wish to express my strong support of the FDIC’s proposal to increase the asset size limit of banks eligible for the streamlined small-bank CRA examination to $1 billion. While GCB does not have a holding company, I also support the proposed elimination of the separate holding company qualification. Just because we might choose in the future to establish a holding company to allow us to access so-called "financial services company" authority, it does not change the fact that we would continue to be a small community bank.

For small banks such as mine, the CRA proposal will greatly reduce the paperwork and regulatory burden for my staff by allowing us to continue to be evaluated using the smaller institution examination. Let me be clear that this would not reduce or weaken our commitment to reinvest in our communities. For Greenfield Co-operative Bank, reinvesting in our local communities has always made good business sense. Making these regulatory exams more streamlined will not change the way community banks such as GCB conduct business. It would not reduce the volume of loans. Instead, it will allow us to free up human and financial resources that the large bank exam would require. We can then use those resources to meet the credit needs of our community as my staff are free to originate loans and provide other services.

Under the more streamlined CRA exam, community banks would still be required to lend to all segments of their communities, including low-and moderate-income individuals and neighborhoods and would continue to be evaluated by their regulator for compliance. The regulation, if implemented, would decrease regulatory burden in terms of both cost of compliance and the man-hours needed to comply with the current large bank procedures. It is unfair to evaluate a $200 million or even a $1 billion bank using the same exam procedures as those used for a $100 billion or $500 billion mega-bank.

The addition of a community development criterion to the small bank examination for those banks over $500 million in assets is a significant improvement over the present investment test. It is often extremely difficult for small banks to find investments which meet the qualified investment test and which are located in their own communities. As a result, banks such as Greenfield Co-operative Bank, which is in a primarily rural area, would have to invest in statewide or regional projects to meet CRA requirements. These investments would actually take resources away my bank’s ability to make loans in our local community. Also, we believe the community development criterion should not be a new stand alone test but part of the evaluation of a bank’s overall lending to the community.

The FDIC’s proposed changes to CRA are an important step in improving the CRA regulations while reducing our regulatory burden. Remember, Greenfield Co-operative Bank, like all community banks, would still be examined for our record of helping to meet the credit needs of our local community under CRA. But the proposal to expand the small bank test will eliminate some of the most problematic and burdensome elements of the current CRA regulation for us.

Thank you for taking the time to read this and consider our comments on this important proposal.

Sincerely,
Michael E. Tucker