March 4, 2002
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/OES
Federal Deposit Insurance Corporation
550-17th
Street, N.W.
Washington, D.C. 20429
Re: Policy Statement Regarding Minority-Owned Depository Institutions 67
FR 77 (January 2, 2002)
Dear Mr. Feldman:
America's Community Bankers ("ACB")1is pleased to
comment on the Proposed Policy Statement on Minority-Owned Depository
Institutions issued by the Federal Deposit Insurance Corporation (the
"FDIC"). The proposed provisions include the best methods for
preserving and encouraging minority ownership of depository institutions.
ACB Position Summary
ACB supports the FDIC in its efforts to provide a more structured
framework to promote the preservation of minority-owned depository
institutions. ACB agrees with the FDIC that technical assistance,
training, and educational programs are integral to the success of
minority-owned depository institutions. In addition, ACB believes that the
FDIC will be an important liaison between minority-owned depository
institutions and other federal financial regulatory agencies and trade
associations.
ACB supports the FDIC's efforts to clarify the definition of
minority-owned depository institutions, enhance communication between the
FDIC and minority-owned depository institutions, create new opportunities
to provide technical assistance, and update guidance related to problem
minority-owned depository institutions. We believe minority-owned
depository institutions provide a unique service to their communities, and
welcome the opportunity to comment.
Responses to Specific Questions
Definition of "minority-owned"
ACB believes the definition of a minority-owned depository institution
should be updated to reflect the following change: "minority means
any African American, Native American, Hispanic American or Asian
American."
ACB believes that 51 percent ownership by minority persons is sufficient
to determine minority status. ACB also recommends that minority status be
conferred on an institution in which a minority person has controlling
interest, as defined by the Federal Deposit Insurance Act, 12 U.S.C.
18170)(8), and no non-minority controlling interest exists simultaneously.
ACB proposes that minority status be based solely on ownership or control
by U.S. citizens and legal residents. ACB believes consideration should be
given to a multi-step test:
(1) 51 percent ownership by a minority person; and/or
(2) minority-owned as defined by Section 308(b) of FIRREA; and
or
(3) a majority of the board of directors, account holders, and the
community which the institution serves are minority.
ACB supports a definition of "minority-owned" derived from
Section 308 (b) of FIRREA. However, ACB is also concerned that confusion
may exist because of other possible definitions of
"minority-owned" that may be applied to depository institutions.
These include:
The U.S. Small Business Administration's 2001 Survey of Minorities in
Business American Indian-and Alaska Native/Asian -and Pacific
Islander/Black/Hispanic -owned businesses are those for which the sole
proprietor is American Indian-and Alaska Native/Asian -and Pacific
Islander/Black/Hispanic, or in the case of firms with multiple owners,
where 51 percent of stock interest, claims, or rights were held by
American Indian-and Alaska Native/Asian -and Pacific
Islander/Black/Hispanic.
Community Reinvestment Act, 12 USC 2907 (b) (1) (3)
Minority Depository Institution. The Term "minority institution"
means a depository institution where more than 50 percent of the ownership
or control of which is held by one or more minority individuals; and more
than 50 percent of the net profit or loss of which accrues to one or more
minority individuals.
ACB recommends that the FDIC attempt to reconcile such differences in
language, or clarify whether such differences reflect meaningful
distinctions.
Mutual Institutions
ACB supports the FDIC's view that mutual institutions will be considered
minority-owned if a majority of the board of directors, account holders,
and the community which the institution serves are minority.
Information Collection
ACB does not support as feasible the mandatory collection of information
regarding the minority composition of account holders and community
stakeholders. Should an institution self-certify its minority status, it
would have the obligation to verify that self-certification by whatever
means acceptable.
Self-Certification
ACB believes a process of self-certification is sufficient, subject to
verification upon examination. Such a process will minimize unintended
regulatory burden and facilitate the statutory mandate.
National Coordinator
ACB believes a national coordinator will serve a useful role in outreach
to minority-owned depository institutions. ACB believes a more formal
structure within the Division of Supervision will provide useful
communication between the FDIC and minority-owned depository institutions.
The national coordinator will further demonstrate the FDIC's interest in
both outreach and preservation of minority institutions. ACB strongly
believes the National Coordinator will be a critical liaison between
federal regulatory agencies and minority-owned depository institutions.
However, ACB believes regional coordinators are as important in assisting
minority-owned depository institutions because regional coordinators have
direct interaction with their "local" institutions. ACB believes
a national coordinator will be a clearinghouse and a link between all
regional offices and minority-owned depository institutions. The national
coordinator, working in conjunction with regional coordinators, should
provide quarterly reports to the Chairman of the FDIC to ensure the needs
and goals of minority-owned depository institutions are met.
Technical Assistance
ACB believes that technical assistance would be useful to minority-owned
depository institutions. However, if at the conclusion of a scheduled
examination the FDIC provides for a return visit, ACB believes this return
visit should be optional, and available to minority-owned depository
institutions only on request. ACB believes coordination of an optional
visit should be among the responsibilities of the regional coordinator.
ACB believes minority institutions value technical assistance from the
FDIC and may find return visits at the conclusion of an examination to be
a valuable option. Also, ACB believes better examiner training is
necessary to assist minority-owned depository institutions improve
benefits that might be conveyed through the examination process.
Training Opportunities
ACB believes that the FDIC should encourage the national coordinator to
work with minority institutions to help identify training and educational
programs. These programs would be useful to all minority-owned depository
institutions. For example, programs should focus on peer group
comparisons, cultural and demographic issues, small business and community
development training, and management education programs. In addition, the
national coordinator should evaluate individual institutions to help
identify programs that will benefit that specific institution.
Preservation of minority institutions at risk of failure
ACB believes that the FDIC has an obligation to look at alternative
mechanisms for maintaining the minority status of a depository
institution. However, consideration must be given to costs imposed on the
BIF and SAIF funds, which should not be placed at risk.
Website
ACB believes the national coordinator should survey minority-owned
depository institutions on their needs in order to provide adequate
recommendations for the FDIC Website. ACB agrees with the FDIC that the
website should provide links to the list of minority-owned depository
institutions and their trade associations, and programs that specifically
affect minority-owned depository institutions.
Conclusion
ACB appreciates the opportunity to comment on this proposed Policy
Statement, and will assist the FDIC in any way possible to preserve and
promote minority ownership of depository institutions. Thank you for the
opportunity to comment on this important matter.
Sincerely,
Charlotte M. Bahin
America's Community Bankers
Directory of Regulatory Affairs
Senior Regulatory Counsel
1 ACB represents the nation's community
banks of all charter types and sizes. ACB members, whose aggregate assets exceed
$1 trillion, pursue progressive, entrepreneurial and service-oriented strategies
in providing financial services to benefit their customers and communities.
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