| BANTERRA
From: Carolyn Pool [mailto:cpool@banterrabank.com]
Sent: Thursday, September 16, 2004 1:12 PM
To: Comments
Subject: FDIC CRA Proposal
FDIC:
As Chairman and CEO of Banterra, I and the Board of Directors of
Banterra strongly support the FDIC’s proposal to raise the threshold for
the streamlined small bank CRA examination to $1 billion without regard
to the size of the bank’s holding company. This would greatly relieve
the regulatory burden imposed on small banks under the current
regulation, which are required to meet the standards imposed on the
nation’s largest $1 trillion banks. Community banks would still be
required to help meet the credit needs of their entire communities and
would continue to be so evaluated by their regulator.
We further support the addition of a community development criterion
to the small bank examination for larger community banks, but we believe
the new community development (CD) criterion should be applied only to
banks greater than $500 million up to $1 billion. Community banks up to
$500 million now hold about the same percent of overall industry assets
as community banks up to $250 million did a decade ago when the revised
CRA regulations were adopted, so this adjustment in the CRA threshold is
appropriate. As bankers and FDIC examiners know, it has proven extremely
difficult for small banks, especially those in rural areas such as
Banterra, to find appropriate CRA qualified investments in their
communities. Many small banks have had to make regional or statewide
investments that are extremely unlikely to ever benefit the banks’ own
communities. This result certainly was not intended by Congress when it
enacted CRA.
We strongly oppose making the CD criterion a separate test from the
bank’s overall CRA evaluation. Such differentiation creates the
impression that CD lending is different from the provision of credit to
the entire community. The current small bank test considers the
institution’s overall lending in its community. A separate test would
create an additional CD obligation and regulatory burden, eroding the
intent of the streamlined exam.
We strongly support the FDIC’s proposal to change the definition of
“community development” from only focusing on low- and moderate-income
area residents to including rural residents. This change will go a long
way toward eliminating the current distortions in the regulations that
result in a small rural bank being told to invest in regional,
affordable housing bonds for an urban area not in the bank’s community.
Thank you for your consideration.
Sincerely,
Everett D. Knight
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