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FAIRNESS IN RURAL LENDING
From: Brown, Mike R. [mailto:Brown.Michael25@mayo.edu]
Sent: Thursday, September 16, 2004 11:58 AM
To: Comments
Subject: Proposal by FDIC to change CRA regulations
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429
September 16, 2004
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a board member of Fairness In Rural Lending, I am requesting that
the FDIC withdraw its proposal to change the Community Reinvestment Act
regulations for mid-sized banks. The FDIC proposal will especially harm
the more rural parts of the United States, where there are already fewer
banks that are covered by the "large bank" regulations of CRA. The
overall impact of this would be just one more "nail in the coffin" of
rural communities. My use of the word "community" means a locally based
economic, social and political life free of exploitation from corporate
opportunists outside themselves.
The difference between how "small" banks and "large" banks are
currently reviewed for CRA purposes is that the large banks have a
service test and investment test in addition to a lending test. The
investment test is an important tool for increasing the amount of
affordable housing and community development investments in our
communities because the banks that are subject to the large bank test
feel more need to work harder to support affordable housing and make the
kinds of investments that help low and moderate income people.
Currently in Wisconsin there are approximately 310 financial
institutions covered by CRA. With the current $250 million threshold, 64
institutions are considered large banks while the other 246 are small
banks. The Office of Thrift Supervision (OTS) recent decision to raise
the threshold for thrifts to $1 billion removed four of the 64
institutions from the large bank test, but if the FDIC follows suit
another 25 institutions would be shifted from the large bank to the
small bank category and there would be just 35 "large banks" left in
Wisconsin. Some rural counties would either no longer have any offices
of a "large bank" located within them or would be reduced to having just
one large bank.
The proposal by the FDIC to allow banks between $250 million and $1
billion in assets to pick and choose which types of activities they do
to meet a new community development test will prove to provide little
value to the intended beneficiaries of the Community Reinvestment Act,
the low and moderate income people of our communities. In rural areas
this is particularly true because the FDIC's proposes that "'community
development' activity could benefit either low- and moderate-income
individuals or individuals who reside in rural areas." Creating such a
broad definition of community
development, which could easily be interpreted to mean that loaning
money to a Wal-Mart store opened in a rural area is "community
development," will make the Community Reinvestment Act virtually
meaningless in rural communities.
I urge the FDIC to listen to the voices of National Community
Reinvestment Coalition members and withdraw this proposal and then begin
to more rigorously enforce the Community Reinvestment Act in rural
areas. Too many of the mid-sized banks, which are so important for our
rural economy, are getting by with doing very little community
development service and investment in our communities. We need you to do
a better job enforcing the Community Reinvestment Act.
Sincerely,
Michael Brown
E2601 Zietlow Ln
Chaseburg, WI 54621
mbrown@mwt.net |
