DOMINI SOCIAL INVESTMENTS LLC
From: Adam Kanzer [mailto:akanzer@domini.com]
Sent: Tuesday, April 06, 2004 3:40 PM
To: regs.comments@occ.treas.gov; regs.comments@federalreserve.gov;
Comments; regs.comments@ots.treas.gov
Cc: mark.willis@chase.com; mark_goldfus@ml.com; caniccor@mindspring.com
Subject: Domini Comments on CRA Revisions
April 6, 2004
Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E St. SW,
Washington 20219
Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429
Regulation Comments, Attention: No. 2004-04
Chief Counsel's Office
Office of Thrift Supervision
1700 G Street NW
Washington DC 20552
Dear Officials of Federal Bank and Thrift Agencies:
I am writing on behalf of Domini Social Investments LLC, an SEC-registered
investment adviser that specializes exclusively in socially responsible
investing, to urge you to withdraw the proposed changes to the
Community Reinvestment Act (CRA) regulations. CRA has been instrumental
in increasing access to homeownership, boosting economic development,
and expanding small businesses in the nation's minority, immigrant,
and low- and moderate-income communities. We believe that your
proposed changes are contrary to the CRA statute and risk halting
the progress made in community reinvestment.
Domini Social Investments manages more than $1.8 billion in assets
for individual and institutional mutual fund investors who wish
to incorporate social and environmental criteria into their investment
decisions. We manage the Domini Social Equity Fund, the oldest
and largest socially and environmentally screened index fund, and
the Domini Social Bond Fund and Domini Money Market Account, two
investment vehicles with unique commitments to community development.
Community development investing is one of the three primary strategies
employed by socially responsible investors, reflecting our belief
that a healthy economy must be built from the bottom up. Our bond
fund is submanaged by ShoreBank, of Chicago. It is the first mutual
fund to be submanaged by a community development financial institution.
The Fund sets aside 10% of its portfolio to direct investments
in community development, and considers community development issues
for all of its holdings. Our money market is a pass-through account
to ShoreBank that is fully invested in community development initiatives.
We also consider community issues for all of our corporate holdings,
evaluating, for example, a bank’s CRA rating prior to investment.
We have also raised predatory lending issues with our holdings
through our proxy voting policies and our shareholder advocacy
program. A corporation’s performance on these issues is clearly
critical to providing access to capital to underserved communities.
We also believe that strong performance in these areas is beneficial
to the company’s bottom line, and for long-term shareholder
value.
Our social research providers often seek counsel from CANICCOR,
an independent research organization that specializes in the analysis
of HMDA data. CANICCOR has submitted thorough comments on these
proposed rule changes, and we commend them to your attention. We
also support comments submitted by the National Community Reinvestment
Coalition.
The proposed changes include three major elements: 1) provide streamlined
and cursory exams for banks with assets between $250 million and
$500 million; 2) establish a weak predatory lending compliance
standard under CRA; and 3) expand data collection and reporting
for small business and home lending. The beneficial impacts of
the third proposal are overwhelmed by the damage imposed by the
first two proposals. In addition, the federal banking agencies
did not update procedures regarding affiliates and assessment areas
in their proposal, and thus missed a vital opportunity to continue
CRA's effectiveness.
The proposed changes to CRA will directly undercut the Administration's
emphasis on minority homeownership and immigrant access to jobs
and banking services. The proposals regarding streamlined exams
and the anti-predatory lending standard threaten CRA's statutory
purpose of the safe and sound provision of credit and deposit services.
The proposed data enhancements would become much more meaningful
if the agencies update procedures regarding assessment areas, affiliates,
and the treatment of high cost loans and purchases on CRA exams.
CRA is simply a law that makes capitalism work for all Americans.
It is too vital to be gutted by harmful regulatory changes and
neglect. Thank you for your attention to this critical matter.
Please feel free to contact us if you would like to discuss this
issue further.
Sincerely,
Adam Kanzer
General Counsel
Mark Goldfus, Sr. Vice President, Public Policy, Merrill Lynch
Mark Willis, Executive Vice President, Community Development Group,
JPMorgan Chase
National Community Reinvestment Coalition
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Adam Kanzer
General Counsel & Director of Shareholder Advocacy
Domini Social Investments LLC
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