CHILDREN'S
DEFENSE FUND
Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington,
DC 20429-9990.
RE: R1N 3064-AC50
Dear Mr. Feldman:
The Children's Defense Fund opposes the Federal Deposit Insurance
Corporation's (FDIC) proposed rule changes to the Community Reinvestment
Act (CRA). One change would raise the asset level for banks subject
to CRA exams on services, investment and lending from $250 million
to $1 billion. Another change would eliminate the low- and moderate-income
targeting requirement for receiving credit under CRA for about 1,600
of the over 5,000 banks you regulate, most of which are in rural
areas.
To date, 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.
Currently, mid-size banks, those with assets between $250 million
and $1 billion, must engage in lending, investing, and providing
services in the communities. Under your proposal, a mid-size bank
cease providing an array of comprehensive community development activities
needed to ensure low- and moderate-income families and communities
continue to thrive.
The proposed change will result in significantly fewer loans and
investments in affordable rental housing, Low-Income Housing Tax
Credits, community service facilities such as health clinics, and
economic development projects. Mid-sized banks could skirt compliance
by spreading around a few grants or sponsoring a few homeownership
fairs rather than engaging in comprehensive efforts to provide community
development loans, investments, and services. Mid-size banks would
have no incentive to make sustained efforts to provide affordable
banking services, and . checking and savings accounts to families
with modest incomes, nor maintain and/or build bank branches in low-
and moderate-income communities. The proposed targeting change would
divert community development activities away from the low- and moderate-income
communities and families that CRA currently targets further threatening
rural areas.
Children's Defense Fund urges you to reserve your call for these
rule changes that will negatively impact low- and moderate-income
families. If the proposed changes are enacted, the Administration's
goals of creating 5.5 million new minority homeowners by the end
of the decade will be thwarted, low-and moderate-income families
with children will have less access to affordable banking services,
and low and moderate income community development will be dramatically
slowed.
Sincerely,
Deborah Cutler-Ortiz
Director of Family Income and Jobs Division
Children's Defense Fund
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