CHICAGO
REHAB NETWORK
September 17,
2004
Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation550 17th St., N.W.
Washington D.C., 20429
Re: RIN number 3064–AC50
Dear Secretary Feldman:
I am writing from the Chicago Rehab Network 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 affected. 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 statewide. We
urge you to withdraw the proposed changes to the CRA regulation.
Sincerely,
Kevin F. Jackson
Executive Director
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