FDIC Federal Register Citations

From: Ken Pennings [mailto:kpennings@wichurches.org]
Sent: Monday, September 20, 2004 10:31 AM
To: Comments
Subject: Dear Mr. Feldman...

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429

September 20, 2004

RE: RIN 3064-AC50

Dear Mr. Feldman:

As a concerned citizen of Wisconsin, 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 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,
Rev. Ken Pennings
Wisconsin Council of Churches