Scott
County Housing Council
From: Rick Schloemer
Sent: Thursday, August 26, 2004 2:33 PM
To: Comments
Subject: community reinvestment RIN 3064-AC50
August 26, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a member of the National Community Reinvestment Coalition, the
Scott County
Housing Council urges you to withdraw your proposed changes to the
Community
Reinvestment Act (CRA) regulations. CRA has been instrumental in
increasing
homeownership, boosting economic development, and expanding small
businesses in
the nation’s minority, immigrant, and low- and moderate-income
communities.
Your proposed changes are contrary to the CRA statute and Congress’ intent
because they will slow down, if not halt, the progress made in community
reinvestment.
Under the current CRA regulations, banks with assets of at least
$250 million
are rated by performance evaluations that scrutinize their level
of lending,
investing and services to low- and moderate-income communities. The
proposed
changes will eliminate the investment and service parts of the CRA
exam for
state-chartered banks with assets between $250 million and $1 billion.
In place
of the investment and service parts of the CRA exam, the FDIC proposes
to add a
community development criterion. The community development criterion
would
require banks to offer community development loans, investments and
services.
The community development criterion would be seriously deficient
as a
replacement for the investment and services tests. Mid-size banks
with assets
between $250 million and $1 billion would only have to engage in
one of three
activities: community development lending, investing or services.
Currently,
mid-size banks must engage in all three activities. Under your proposal,
a mid-
size bank could now choose a community development activity that
is easiest for
the bank instead of providing an array of comprehensive community
development
activities needed by low- and moderate-income communities.
Here in the state of Iowa, 296 of the 297 banks regulated by the
FDIC would be
exempt from the stricter “three-part test”. The effect
of removing that many
banks from the need to engage in all three levels of lending and
services will
be devastating to Iowa’s rural areas as well as its larger
urban communities.
The consequences for low- and moderate-income communities is that
CRA examiners
will no longer expect mid-size banks to maintain and/or build bank
branches in
their communities. Mid-sized banks will no longer make sustained
efforts to
provide affordable banking services, and checking and savings accounts
to
consumers with modest income. Mid-size banks will also not respond
to the
needs for the growing demand for services needed by immigrants which
is a
growing population in Iowa.
Another destructive element in your proposal is the elimination
of the small
business lending data reporting requirement for mid-size banks. Mid-size
banks
with assets between $250 million and $1 billion will not longer be
required to
report small business lending by census tracts or revenue size of
the small
business borrowers. Without such data on lending to small businesses,
it is
impossible for the public at large to hold mid-size banks accountable
for
responding to the credit needs of minority-owned, women-owned, and
other small
businesses. Data disclosure has been responsible for increasing access
to
credit precisely because disclosure holds banks accountable.
In summary, your
proposal is directly the opposite of CRA’s
statutory mandate
of imposing a continuing and affirmative obligation to meet community
needs.
Your proposal will dramatically reduce community development lending,
investing
and services. You compound the damage of your proposal in rural areas,
which
are least able to afford reductions in credit and capital. You also
eliminate
critical data on small business lending. Two other regulatory agencies,
the
Federal Reserve Board and the Office of the Comptroller of the Currency,
did
not embark upon the path you are taking because they recognized the
harm it
would cause.
CRA is too vital to be gutted by regulatory fiat and neglect. Please
reverse
your proposed course of action, or we will ask Congress to halt your
efforts
before the damage is done.
Sincerely,
Rick Schloemer
Resource Development Director
Scott County Housing Council
131 West 3rd Street, Suite M03
Davenport, Iowa 52801
|
