Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ISS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429-9990.
Re: RIN 3064-AC50
Re: RIN 3064-AC50
Gentlemen:
I strongly oppose
the FDIC’s proposed changes to its Community
Reinvestment Act regulations.
As one of the
Federal Home Loan Bank System’s original twelve
community investment officers in the late 1970s, I saw first-hand
the early benefits of a vigorously enforced CRA in both urban and
rural communities. Later, with the advent of the Bank System’s
Affordable Housing Program, CRA continued to be a vital tool for
community development. Carefully crafted amendments in 1995 updated
the regulatory structure of CRA without compromising its effectiveness.
Without diminishing
the negative impact of the FDIC’s proposal
in urban America, I am especially concerned about the disastrous
consequences its adoption would have in rural America. My observations
about the importance of CRA in rural America come both from my own
professional experience in the Southeast for nearly 25 years as the
Federal Home Loan Bank of Atlanta’s community investment officer,
and from my exposure to the work of a wide variety of rural CDCs
from all parts of the country as a member of the Local Initiatives
Support Corporation’s Rural Advisory Committee, both before
and after my retirement from the Bank System.
Though urban
areas have been perceived as CRA’s primary beneficiaries,
CRA’s impact has been especially pronounced in rural America,
where larger banking institutions have little or no presence. In
smaller towns and rural areas, affordable housing and community developers
must rely on locally based, modestly sized community banks, and these
institutions have been significantly motivated under current CRA
regulations to seek out and take advantage of lending, investment,
and service opportunities that benefit low- and moderate-income households
and areas within their communities.
The FDIC’s current proposal will virtually eliminate CRA as
an effective incentive in rural America. While the proposal attempts
to address the clearly negative impact it will have on rural areas
by including the catch-all phrase “or . . . in rural areas” in
each of the
elements of its definition of “community development,” the
attempted solution is fatally over-broad, which the proposal then
compounds by allowing “small” banks to meet the community
development criterion with only one of the three elements (services,
for example). More importantly, the proposal completely eliminates
low- and moderate-income households or areas from the equation in
the evaluation of newly designated small banks “in rural areas,” despite
the clear mandate of the statute that such households and areas be
included. The combination of the two (i.e., credit for any community
development activity in a rural area, even if it’s only a “service,” and
no incentive to include low- and moderate-income households or areas)
will seriously jeopardize current partnerships between rural community
developers and local banks, and dramatically diminish the chances
for future affordable housing and community development partnerships
in rural areas.
In the course of its almost 27-year history, CRA has proven remarkably
successful, without ever mandating a single loan, investment, or
service. It has been especially effective in rural America, where
several thousand rural community developers have relied on it to
help them attract the participation of their local financial institutions.
Please do not jeopardize the futures of these community developers
and the rural communities they serve. I respectfully ask that you
withdraw this proposal.
Sincerely,
Robert S. Warwick
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