Isabella
Bank & Trust
September 20, 2004
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: Community Reinvestment, RIN number 3064-AC50; Proposal to Expand
Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman,
As a community banker for over 26 years, I join my fellow community
bankers throughout the nation in strong support for the FDIC’s
proposal to increase the asset size limit of banks eligible for the
stream-lined small-bank CRA examination. I also strongly support
the elimination of the separate holding company qualification.
The proposal will greatly alleviate the unnecessary paperwork and
examination burden without any weakening of 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. Bank 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.
It does not make sense and is inequitable to evaluate a $500 million
or $1 billion bank using the same procedures as for the $100 billion
or $500 billion bank.
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 (especially those in rural areas) 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 that the FDIC’s proposed community
development requirement for banks between $250 million and $1 billion
is more flexible and more appropriate that 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 both meet the local community’s need and make
sense in the light of 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.
Rural banks are frequently called upon to support needed economic
or infrastructure development such as school construction, revitalizing
Main Street, or loans that help create needed or better-paying
jobs. These activities should NOT be ineligible for CRA credit
because they do not benefit only low-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, like mine, will find they cannot sustain independent existence
because of the crushing 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 regulatory
burden, it will make it easier for community banks like mine to continue
to provide committed service to local communities that few other
financial service providers are willing to do.
Thanks you for considering my views.
Sincerely,
Leo R. Wickert Jr
Vice President
Isabella Bank & Trust
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