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BICKERDIKE REDEVELOPMENT CORPORATION
2550 West North Avenue
Chicago, Illinois 60647
September 16, 2004
Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., N.W.
Washington D.C.,
20429
Re: RIN number 3064–AC50
Dear Secretary Feldman:
I am writing from Bickerdike Redevelopment Corp. to comment on the
Federal Deposit Insurance Corporation's (FDIC) proposed changes to their
regulation of the Community Reinvestment Act. This proposal would
change the definition of institutions considered "small" for CRA
purposes from. any institution with less that $250 million in assets and
not part of a holding company with over $1 billion in assets to
include all institutions with less than $1 billion in assets regardless
of holding company size. Additionally, the FDIC proposal would add a
community development criterion for institutions between $250 million
and $1 billion in assets and amend the definition of "community
development" to include a rural development component.
We are deeply concerned about the FDIC's proposal for a number of
reasons. First, the proposal would shift a significant number of
financial institutions currently considered "large" for CRA purposes to
"small" status. "Small" banks are subject to streamlined CRA exams that
do not consider an institution's level of community development lending,
investments, grants, and services to low- and moderate-income
communities. These "small" banks would no longer get CRA credit for
their investments in affordable housing developments, developing
innovative financial services products that reach the unbanked, or
expanding their branch networks into underserved communities. Without
this incentive, it is far less likely that banks will participate in
such activities in low- and moderate-income communities. Additionally,
"small" institutions do not report small business lending data despite
the fact that they are major small business lenders.
There is a concern that small cities and rural areas predominantly
served by these mid-sized institutions will be particularly effected.
Second, the community development criterion proposed by the FDIC, for
institutions between $250 million and $1 billion that would allow these
banks to choose one activity (from community development lending,
investments, or services) to be, considered toward their final CRA
rating, is vaguely defined and its weight on CRA exams is
unclear. Finally, changing the definition of "community development"
to include any type of rural development, regardless of its impact on
low- and moderate-income (LMI) households or communities would allow
banks to get CRA credit for investing in projects that have little
benefit for LMI markets.
In Illinois alone, the FDIC's proposal threatens hundreds of millions
of dollars in community development lending and investments. This would
be a critical blow to community reinvestment state-wide. We urge you to
withdraw the proposed changes to the CRA regulation.
Sincerely,
Joy Aruguete,
Executive Director
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