February
11, 2004
From: Ronald G. Gauvin
Compliance Advisor
Subject: 12 CFR Part 345 of FDIC R&R
To: Mr. Robert E. Feldman
Executive Secretary
As an institution
that has recently become a "Large Bank" under
the definitions of Part 345, we are particularly enthusiastic about
the proposed definition of a "small institution."
The examination
procedures for a "small bank" are appropriate
and efficient way to assess whether or not an institution is complying
with the spirit of the Community Reinvestment Act. Consideration
should still be given to expand the definition to
institutions of 5750MM or less than I billion in assets.
From a regulatory stand point, the regulators will be saving a substantial
number of examination hours that can be redirected to other projects
or to a reduction in examination staff. Certainly the FDIC has projected
what the hour and cost savings would be if the definition was to
be expanded to S750MM or S 1 billion. Does it make sense to develop
CRA reports consisting of 30 to 80 pages representing hundreds of
hours, when in fact the small bank CRA report is able to provide
an effective assessment of a financial institutions CPA posture.
Small banks represent such a small percentage of total assets in
this country. It is the banks in excess of SI billion that should
be evaluated for its commitment to community development loans and
investments. It is appropriate that small banks be evaluated to ensure
that they are making sufficient loans in their assessment area with
a certain concentration in low- and moderate-income areas and to
low- and moderate-income borrowers.
I am a retired FDIC examiner of 27 years, with 23 of those years
as a Compliance examiner and FOS. It is my estimate that examination
hours in the Consumer part of the Division could be reduced by 30
to 40 percent. That would certainly have a positive effect to the
budgetary process. It is important that the regulators examine the
benefits for the dollars spent by bought the regulators and the financial
institutions.
From a small bank should be required to meet the credit needs of
its entire community or assessment area, however, it is becoming
more and more difficult for the small banks to find community development
loans and investments, as all the small banks are after the same
assets in trying to satisfy the requirements of the Act.
Increasing the definition to $1 billion will have little adverse
effect on the overall focus of the Act, but will have significant
benefits to the struggling small Financial institutions. who already
have a hefty financial burden in trying to comply with the various
consumer and civil rights regulations, but it will also have a
significant effect on the budgets of the various regulators.
Thank you for the opportunity to share these thoughts.
Ron Gauvin
Compliane Advisor
Southern New Hampshire Bank & Trust
31 Pelham Rd
Salem, NH 03079-4816
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