| Down River Alliance
Robert E. Feldman, Executive Secetary
Attn: Comments
Federal Deposit Insurance Corporation
550 17th St., NW
Washington, DC 20429
April 2, 2004
Dear Mr. Feldman:
As a resident of rural Wisconsin I would like to urge you to amend
your proposed Community Reinvestment Act (CRA) regulation before
finalizing it. There are two points in your proposed regulation that I
would particularly draw your attention to and urge you to change.
1. The emphasis on "asset-based lending" in your predatory lending
standard that you propose to use with the Community Reinvestment Act to
discourage predatory lending.
2. The change in definition of a "small bank" for CRA purposes, which
would raise the threshold from $250 million in assets to $500 million in
assets.
We are all opposed to shady lenders who do "asset-based lending" and
don't take into account a borrower's ability to repay and try to force
borrowers into foreclosure. However, there are a number of asset
stripping practices that legitimate lenders should also avoid. We urge
you to use the CRA exams to discourage lenders from participating in
high cost loans with high fees, frequent flipping of high cost loans,
large prepayment penalties on high cost loans, high cost loans with
single premium credit insurance policies folded into the cost of the
loan, and high cost loans with negative amortization.
As residents of rural communities we are acutely aware of the
importance that smaller banks play in the overall health of our
communities. We also believe that it is important for the regulators to
encourage the larger of the small banks to support community development
lending and investments, such as support for down-payment assistance
programs, homebuyers counseling programs, and small business and small
farm support. The large bank CRA exam does a better job of encouraging
this type of reinvestment in the community than the small bank exam does
and we ask you not to raise the asset threshold definition of a small
bank.
In the counties around where I live, the State Bank of Lacrosse is
one bank that would be affected by this new rule since it has assets of
less than $500 million. While some of the largest banks in the nation
like Wells Fargo and U.S. Bank have offices nearby, I believe that it is
important for the larger small banks, which have more reason to pay
attention to rural communities, to continue to be examined under the CRA
large bank exam.
Thank you very much for paying attention to my concerns.
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