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FDIC Federal Register Citations National NeighborWorks Association Mr. Robert Feldman RIN Number 3064-AC50 Dear Mr. Feldman: I am writing on behalf of the National NeighborWorks Association (NNA) to voice opposition to the Federal Deposit Insurance Corporation (FDIC’s) proposed changes to the Community Reinvestment Act (CRA) regulations. In particular, we believe raising the asset threshold for small banks to $1 billion would severely undermine partnerships that community based organizations in our network have developed with banks. NNA is a national association of over 160 NeighborWorks® organizations (NWOs) that advocate for better neighborhoods and housing for low- and moderate-income individuals and families. Our member NWOs use Neighborhood Reinvestment Corporation funds to leverage private dollars in order to create new homeowners, revitalize distressed communities, and build single family and multi-family housing for low- to moderate-income families. Since 1996 the NeighborWorks® Campaign for Home Ownership has assisted 70,000 households to become homeowners, 89 percent of whom were low- or moderate-income. In addition, our network provided homeownership counseling to over 420,000 individuals. These impacts could not have been achieved without the significant participation of our bank partners – as investors, lenders and service providers. Banks are vital partners in the work of NWOs and the incentive provided by CRA has been instrumental in building and maintaining these partnerships. CRA provides an incentive for financial institutions to reach out and develop relationship with NWOs and is a critical force in keeping banks committed to providing services and products designed specifically for low and moderate income consumers. While some banks might continue to serve low and moderate income markets without the incentive of CRA, we firmly believe that most institutions would not. Spurred by CRA requirements, lenders frequently work with NWOs to capitalize loan pools or create new financial products targeted to underserved market niches that banks on their own can not reach effectively. CRA encourages lenders to become involved in community education and financial literacy efforts and CRA has forced institutions, either directly or with the help of community based organizations, to make a range of financial services and products available to low and moderate income communities within their service area. For example: In Reading, Pennsylvania, a lender looking to improve its CRA rating approached the Neighborhood Housing Services (NHS) of Reading to develop a new loan product designed to assist low-income families purchase and rehabilitate their homes. Although meeting a clear community need, the product held an implied greater risk for the bank. In Inglewood, California, the smaller asset-sized lenders provide financial support for the “Financial Fitness” program operated by Inglewood NHS. Financial education is more important than ever as consumers are faced with a marketplace offering more products, different pricing and confusing variables. CRA credit is an important incentive to keep lenders funding these vital financial literacy programs. Affordable Housing Resources (AHR) in Nashville, TN relies on area banks to invest in a first mortgage loan pool that has provided over $11 million in below market mortgages to low income buyers and moderate income persons buying in very low income census tracks. There are many NNA members that, like AHR, rely on bank investments to support loan pools that are designed to assist low and moderate income individuals and families become homeowners. These are just a few examples of how NWOs in our NNA network have used CRA to leverage and expand the availability of bank products and services in low and moderate communities. Our banking partners know that NWOs are solid business partners and they are attracted to the opportunity to invest in loan pools and other programs designed to serve emerging markets that most conventional banks overlook. NWOs provide services and products that allow non-traditional borrowers to become homeowners and access the marketplace. While NWOs and their bank partners (most of which would be considered “small banks” under the revised regulations) have worked well together, many of these bank partners have stated that they would decline from participating in such partnerships if the CRA incentive were eliminated. Current CRA regulations require that banks with assets of $250 million or more must satisfy CRA performance evaluations that look at the lending, investing, and services provided by the bank to low and moderate income communities in their service area. Small institutions, defined under current regulations as banks with less than $250 million in assets, are subject to a streamlined CRA exam that does not include either an investment test or a services test. Under the proposed changes the asset threshold for small banks would increase from $250 million to $1 billion, thus allowing more institutions to take advantage of the streamlines CRA exam. Under the new regulations, 95 percent of the state chartered banks regulated by the FDIC would not be subject to the investment or services test. The proposed rule would have an even deeper impact in rural communities where 99 percent of the FDIC regulated banks have assets of less than $1 billion. This would have a devastating impact on investment in the communities we serve and on the community development industry as a whole. Without the incentive of CRA, many banks will discontinue or drastically reduce the level of investment and services they provide to low and moderate income individuals and communities. The FDIC’s proposal to replace the investments and services test with a new community development test for institutions between $250 million and $1 billion is not sufficient to stimulate new investment. The proposal would only require that these institutions engage in one of the three activities – lending, investing or services – and we firmly believe that all three activities are vital and banks should be required to engage in these activities throughout their service area. NNA also opposed the FDIC proposal that any community development activity in a rural area be deemed as a qualified CRA activity. Though NNA shares FDIC’s concern that rural areas need greater access to financial capital and services, it is clear the new regulations totally ignore the needs of low and moderate income individuals and communities. Many of our rural NWOs are already struggling with the loss of small and medium locally-controlled banks as the banking industry is consolidated through bank mergers. This trend has had a significant impact on low and moderate income communities and resulted in the loss of community lending programs and local loan officers and a reduction in community development resources as grant-making and lending decisions are made at bank headquarters in urban centers which are far removed from their rural customers. CRA provides one of the few tools by which NWOs and other community based organizations can influence the merger process and we will oppose regulatory changes designed to allow more institutions to bypass the full CRA exam process. I appreciate the opportunity to submit comments of the proposed rule on behalf of NNA. This letter was drafted using the collaborative efforts of the NNA membership, a listing of which is attached. NNA membership strongly recommends that the proposed rule be withdrawn and that no action be taken on the current regulations governing CRA. Sincerely, Martina S. Guilfoil Mary Jane Michael, Executive Director Susan Fison, CEO/Executive Director Renee Patten, Executive Director Nigel Roberts, Executive Director Cynthia Burton, Executive Director Pat Atkinson, Executive Director Aurora Gonzales, Executive Director Peggy Hutchison, Executive Director Rita Carrillo, Executive Director Richard Kontz, Executive Director Dawkins Hodges, Executive Director Dennis Lalor, Executive Director Duane Hill, Executive Director Edward Moncrief, Executive Director Lori R. Gay, Executive Director Margaret Grayson, Executive Director Martina S. Guilfoil, Executive Director Glenn D. Hayes, Executive Director Lynette Gibson, Executive Director Pam Canada, Executive Director Peter Carey, Executive Director Rodney Fernandez, Executive Director Renee Walton, Executive Director Neighborhood Housing Services of America Al Gold, Executive Director Dan Whalen, Executive Director Lionel Trujillo, Executive Director Suzanne Buchner, Executive Director Bruce Crane, Executive Director James Paley, Executive Director Larry Kleutsch, Executive Director Seila Mosquera, Executive Director Adele Strelchun, Executive Director Arden Shank, Executive Director Askia Muhammed Aquil, Executive Director Chloe Coney, President/CEO David Herkalo, Executive Director Isay Gulley, Executive Director Ron Walker, Executive Director Charles Burton, Executive Director Ralph Knight, Executive Director Cathy Williams, Executive Director Marina Sampanes Peed, Executive Director Young Hughley, Executive Director Virginia Green, Interim President/CEO David Nakamura, Executive Director Bob Zelsdorf, President Cary Jones, Executive Director Tom Lay, Executive Director Bruce Lee Cowhig, Executive Director Bruce Gottschall, Executive Director Debbie Elzinga, Executive Director Mary Tetzlaff, Executive Director Jeffrey V. Gibney, Executive Director Larry Gautsche, Executive Director Patricia Stephenson, Executive Director Michael Snodgrass, President/CEO Kevin Smith, President/CEO Evelyn Friedman, Executive Director Gail Latimore, Executive Director Mossik Hacobian, Executive Director James Cruickshank, Executive Director Jeanne Pinado, Executive Director Normand Grenier, Executive Director Peter Daly, Executive Director Philip Giffee, Executive Director Charles Rucks, Executive Director Cheryl Meadows, Executive Director Michael Braswell, Executive Director Mark Johnston, Executive Director Linda S. Likely, Chief Executive Officer Mark Neumeier, Executive Director Donna Garcia, Executive Director Cynthia Paulson, Executive Director George Garnett, Executive Director Gerald Shechter, Executive Director Sheila Rice, Executive Director H. Christopher Slusher, Executive Director Gregg Warren, Executive Director Paul Rechlin, Executive Director Terry Uland, Executive Director Amy Lockwood, Executive Director Bridget Belton-Jette, Executive Director David Wood, Executive Director Felix Torres, Executive Director Patrick Morrisy, Executive Director Michael Loftin, Executive Director Rose Garcia, Executive Director Brian Sagert, Executive Director Alan Hipps, Executive Director Richard Trouth, Executive Director Cathy Mickens, Executive Director Claire Mitchell-Dumas, Executive Director Jerry Nagy, Executive Director Janice Forte, Executive Director Storm Russell, Executive Director Juan Santana, Executive Director Kim Brumber, Executive Director Margaret Feml, Executive Director Linda Chiarenza, Executive Director NHS of North Bronx, Inc. Marianne Garvin, Executive Vice President Mark Sabella, Executive Director Patrick Madden, Executive Director Paul Mazzarella, Executive Director Paul Brunner, Executive Director Sarah Gerecke, Executive Director John Wiltse, Director of Operations Tonya Ores, Executive Director Ygmar Wiel, Neighborhood Director Amy Klaben, President/CEO William Hale, Executive Director Emily Lipovan Holan, Executive Director Richard McBride, Executive Director Ron Woolwine, Executive Director Rick Williams, President/CEO Tina Koumoutsos, Executive Director William Farnsel, Executive Director Kathryn Kimlin, Executive Director Jim Moorefield, Executive Director Peg Malloy, Executive Director Janis Geist, Executive Director LouAnn Ross, Executive Director Kathleen Little, Executive Director Ronald E. Miller, Executive Director Sandy Salzman, Executive Director Carlos Diaz Rolon, Executive Director Yolanda Gonzales-Laboy, Executive Director David Knowles, Executive Director Sharon Conard-Wells, Executive Director Joseph Garlick, Executive Director Joy McCracken, Executive Director Eddie Latimer, Executive Director Tim Bolding, Executive Director Joe Martinez, Executive Director Kathy Flanagan-Payton, President/CEO Mary Lawler, Executive Director Manuel Estrada, Executive Director Robert Jodon, Executive Director Roy Nash, Executive Director Sandra Williams, Executive Director Walter Moreau, Executive Director Maria Garciaz, Executive Director Sharlene Behunin, Executive Director Janaka Casper, President Brenda Torpy, Executive Director Ed Stretch, Executive Director Tim King, Executive Director Kris Pearson, Executive Director Ludy Biddle, Executive Director Billie MacFarlane, Executive Director George Staggers, Executive Director Tony To, Executive Director Mary Beth Aldrich, Executive Director Domenick Martinelli, Executive Director Terry Testolin, Executive Director Josie Cuda, Executive Director Lynn Talley, Executive Director
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| Last Updated 11/19/2004 | regs@fdic.gov | |