Boston Community Capital
From: Jessica Brooks [mailto:jbrooks@bostoncommunitycapital.org]
Sent: Friday, September 17, 2004 1:49 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50
Mr. Robert E. Feldman
Executive Secretary
ATTN: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 E. 17th Street, NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
On behalf of Boston Community Capital, we are writing to urge you
to withdraw your proposed changes to the Community Reinvestment Act
(CRA) regulations. If enacted, these proposed changes will significantly
harm community development activities across the country.
Boston Community Capital is a community development finance intermediary
whose mission is to help build healthy communities where low-income
people live and work. Our loans strengthen more than 200 community
organizations and provide financing throughout Massachusetts for
• over 4500 units of housing,
• child care facilities and schools that now serve 1300 children,
• non-profit social service providers, and
• 450,000 square feet of commercial space.
In addition, our equity investments support businesses across the
Northeast and help to create or preserve more than 1300 jobs in low-income
communities or for low-income community residents.
Boston Community
Capital has grown from a tiny, start-up, Boston-focused, non-profit
capitalized
with just $3500 of religious money to a regional
organization able to operate at a scale sufficient to have a real
and positive impact on the communities we serve. Moreover, although
our immediate focus is the Northeast region of the United States,
our interests are national. Together with our sister community development
finance intermediaries across the country and with National Community
Capital Association, our premier trade association, we work to create
a national industry – now with more than $10 billion under
management – capable of effectively serving low-income communities
and capable of helping low-income communities harvest the benefits
that can emerge from increased access to commercial capital markets.
Our growth at Boston Community Capital and the growth of our industry
would not have been possible without the firm and unwavering support
and partnership of many institutions and individuals. Local and national
banks have been particularly important partners in our efforts to
serve low-income communities effectively. The Community Reinvestment
Act has been a vital tool for the promoting investment in low-income
communities by banks.
Under the current CRA regulations, banks with assets of at least
$250 million are rated by performance evaluations that scrutinize
their level of lending, investing, and services to low- and moderate-income
communities. The proposed changes will eliminate the investment and
service parts of the CRA exam for state-charted banks with assets
between $250 million and $1 billion. In place of the investment and
service parts of the CRA exam, the FDIC proposes to add a community
development criterion. The community development criterion would
require mid-size banks with assets between $250 million and $1 billion
to engage in only one of three activities: community development
lending, investing or services. Currently, mid-size banks must engage
in all three activities.
Under the proposed changes, there would be no requirements for banks
with up to $1 billion in assets to engage in community development
lending and investments-activities that leverage limited public subsidies
to provide affordable housing and community and economic development.
Without this regulatory impetus, many institutions will significantly
reduce their activity in low income communities because, in general,
they view such activity as higher risk and/or less profitable than
more traditional investing.
The FDIC proposal would significantly harm community development
activities across the country, removing 879 state-chartered banks
with over $392 billion in assets from scrutiny. This will have harmful
consequences for low- and moderate-income communities. Without this
examination, mid-size banks will no longer have to make efforts to
provide affordable banking services or respond to the needs of these
emerging domestic markets.
In addition, your proposal eliminates small business lending data
reporting for mid-size banks. Without data on lending to small businesses,
the public cannot hold mid-size banks accountable for responding
to the credit needs of small businesses. Since 95.7 percent of the
banks you regulate have less than $1 billion in assets, there will
be no accountability for the vast majority of state-chartered banks.
Both the Federal Reserve Board and the Office of the Comptroller
of Currency have recognized the harm this proposal would cause.
The proposed
regulation is in direct opposition to Congressional intent of the
law. In
a letter signed by 30 U.S. Senators to the
four regulatory agencies regarding an earlier proposal (February
2004) to increase the definition of “small bank” from
$250 million to $500 million, the Senators wrote, “This proposal
dramatically weakens the effectiveness of CRA…We are concerned
that the proposed regulation would eliminate the responsibility of
many banks to invest in the communities they serve through programs
such as the Low Income Housing Tax Credit or provide critically needed
services such as low-cost bank accounts for low- and moderate-income
consumers.”
In summary, we
believe the FDIC’s proposed changes to CRA
regulations undermine the intent of the Community Reinvestment Act,
and represent a significant threat to the low-income communities
we serve, and to low-income people and communities across the country.
We urge you to withdraw this proposal from consideration.
Sincerely,
Elyse Cherry
CEO
President, Boston Community Venture Fund
DeWitt Jones
COO
President, Boston Community Loan Fund
Jessica
Brooks
Investor Relations
Boston Community Capital
56 Warren Street
Boston, MA
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