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From: Scott Fraser
[mailto:sfraser@stonesav.com]
Sent: Friday, April 02, 2004 11:05 AM
To: Comments
Subject: Community Reinvestment Act Regulation
Scott Fraser
359 Main Street
Stoneham, MA 02180
April 2, 2004
Dear FDIC:
As a community banker, I strongly endorse the federal bank
regulators' proposal to increase the asset size of banks eligible for
the small bank streamlined Community Reinvestment Act (CRA) examination
from $250 million to $500 million and elimination of the holding company
size limit (currently $1 billion). This proposal will greatly reduce
regulatory burden.
The small bank CRA examination process was an excellent innovation.
As a community banker, I applaud the agencies for recognizing that it is
time to expand this critical burden reduction benefit to larger
community banks. At this critical time for the economy, this will allow
more community banks to focus on what they do best-fueling America's
local economies. When a bank must comply with the requirements of the
large bank CRA evaluation process, the costs and burdens increase
dramatically. And the resources devoted to CRA compliance are resources
not available for meeting the credit demands of the community.
Adjusting the asset size limit also more accurately reflects
significant changes and consolidation within the banking industry in the
last 10 years. To be fair, banks should be evaluated against their
peers, not banks hundreds of time their size. The proposed change
recognizes that it's not right to assess the CRA performance of a $500
million bank or a $1 billion bank with the same exam procedures used for
a $500 billion bank. Large banks now stretch from coast-to-coast with
assets in the hundreds of billions of dollars. It is not fair to rate a
community bank using the same CRA examination. And, while the proposed
increase is a good first step, the size of banks eligible for the
small-bank streamlined CRA examination should be increased to $2
billion, or at a minimum, $1 billion.
Ironically, community activists seem oblivious to the costs and
burdens. And yet, they object to bank mergers that remove the
local bank from the community. This is contradictory. If community
groups want to keep the local banks in the community where they have
better access to decision-makers, they must recognize that regulatory
burdens are strangling smaller institutions and forcing them to consider
selling to larger institutions that can better manage the burdens.
Increasing the size of banks eligible for the small-bank streamlined
CRA examination does not relieve banks from CRA responsibilities. Since
the survival of many community banks is closely intertwined with the
success and viability of their communities, the increase will merely
eliminate some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks
eligible for the small bank streamlined CRA examination process is an
important first step to reducing regulatory burden. I also support
eliminating the separate holding company qualification for the
streamlined examination, since it places small community banks
that are part of a larger holding company at a disadvantage to their
peers. While community banks still must comply with the general
requirements of CRA, this change will eliminate some of the most
problematic and burdensome elements of the current CRA regulation from
community banks that are drowning in regulatory red-tape. I also urge
the agencies to seriously consider raising the size of banks eligible
for the streamlined examination to $2 billion or, at least, $1 billion
in assets to better reflect the current demographics of the banking
industry.
Sincerely,
Scott S. Fraser, VP/Branch Administrator
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