National
Association of Small Business Investment Companies
September 20, 2004
Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
The National Association of Small Business Investment Companies
(NASBIC) represents the interests of the Small Business Investment
Company industry. The industry is currently represented by over 400
SBICs managing more than $23 billion in capital assets. SBICs invest
in U.S. small businesses that meet the size and operational criteria
promulgated by the U.S. government.
At this time, NASBIC is opposed to the FDIC proposal
to: (a) raise the definition of “small bank” from one with no more
than $250 million in assets to one with no more than $1.0 billion
in assets; and (b) change the definition of “community development” to
encompass rural areas as well as low-and moderate-income areas. The
reason for our opposition is that the discussion of the proposed
changes published in the August 20, 2004 Federal Register fails to
provide a detailed, quantitative impact analysis. Without such an
analysis, the proposed change relies on a “percentage of assets
covered” justification for the “small bank” definition
issue. No substantive justification is offered at all for the proposed
change in the “community development” definition. Given
that the FDIC has access to all, or almost all, relevant quantitative
data related to lending, service, and investment from the banks
under its jurisdiction, such important changes should not be adopted
without
discussion of that quantitative data.
Since the “investment” test was included in the “large
bank” CRA examination, banks have become an increasingly important
source of capital for SBICs investing within relevant bank assessment
areas. In turn, SBICs have played an increasingly important role
in the CRA process. For the past several years, more than 25% of
all SBIC investments have been made in companies located in low-
and moderate-income areas. If that source of capital is put in jeopardy
by either or both of the proposed changes, the ability of SBICs to
support small businesses in the CRA areas will be diminished—to
the detriment of the small businesses, the communities in which
they are located, and the workers they employ.
We strongly encourage the FDIC to conduct the quantitative
analysis necessary to any estimate of impact that the proposed
rule changes
will have before adopting or rejecting the same. Thank you for
the opportunity to comment on your proposed changes to the FDIC’s
CRA regulations. If you have any questions about these comments
please do not hesitate to contact us.
Sincerely,
Lee Mercer
|
