LASALLE BANK CORPORATION
April 6,
2004
Jennifer J. Johnson,
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Ave., NW
Washington, DC 20551
Docket N0. R-1181
Communications Division
Public Information Room
Office of the Comptroller of the Currency
250 E Street, SW, Mail Stop 1-5
Attention Docket 04-06
Washington, DC 20219
Robert E. Feldman
Executive Secretary
Att: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: 12 CFR 345
Information Collection Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
RE: Joint Notice of Proposed Rulemaking regarding the Community Reinvestment
Act Regulations
Dear Sir/Madam:
LaSalle Bank Corporation (LBC) appreciates the opportunity to provide
comment on the Joint Notice of Proposed Rulemaking regarding the
Community Reinvestment Act. This letter is written on behalf of all
LBC entities that are subject to the provisions of the Community
Reinvestment Act.
LBC is an indirect subsidiary of ABN AMRO Bank N.V. (Bank) which
is headquartered in Amsterdam, the Netherlands. The Bank currently
has over $500 billion in assets, approximately 111,000 employees,
and a network of over 3,500 offices in over 60 countries. The Bank
maintains several branches, agencies, and offices in the United States.
LaSalle Bank Corporation
Member of the ABN AMRO Group
LBC is a financial holding company headquartered in Chicago, Illinois.
LBC owns LaSalle Bank National Association located in Chicago, Illinois
and Standard Federal Bank National Association, located in Troy,
Michigan. These banks maintain over 400 offices in Illinois, Michigan
and Indiana. ABN AMRO Financial Services, Inc., is a subsidiary of
LaSalle Bank National Association. ABN AMRO Mortgage Group, Inc.,
is a subsidiary of Standard Federal Bank National Association.
As we indicated
in our letter commenting on the “Joint Advance
Notice of Proposed Rulemaking regarding the Community Reinvestment
Act Regulations” on October 17, 2001, we believe that substantial
changes to the Regulation at this time might not only require new
changes to record keeping systems and procedures, but could also
undermine the ability to accurately track trends and patterns in
Community Reinvestment activity over time. We believe that changes
made in 1995 substantially improved the Community Reinvestment Act
by their concentration on bottom line results rather than process,
and that further time should be allowed to realize the full impact
of those changes.
With that in mind, reflecting on the proposals recommended in the
current Notice of Proposed Rulemaking on the Community Reinvestment
Act (CRA), we would like to make the following comments and recommendations:
Community Development and the Investment Test.
The Notice of Proposed Rulemaking properly acknowledges that under
the felt pressure of the Investment Test, some banks may have invested
in community development projects which were in fact economically
unsound. The NPR also more than once highlights the importance
of the “performance context” as an important aspect
of CRA implementation and evaluation of an institution’s
CRA program. Within the context of an examination, performance
context needs to be stressed by Examiners, so institutions will
not be penalized if legitimate CD investment opportunities are
not available to them. This will alleviate the temptation to make
economically unsound and imprudent investments. In this scenario
the community development rating would be based on the totality
of the institution’s CD activities, without regard to a percentage
weighting of the lending, investment, or services mix.
Weight given to Community Development Investments from past exams.
Past investments still on the books represent funds which are not
now available for other profitable uses. We believe, therefore,
that the bank should receive credit for the full amount of the
current balance in these investments. By the same token, credit
should also be given for commitments since they bind the institution
to meet a funding responsibility in the future.
LaSalle Bank Corporation
Member of the ABN AMRO Group
Fair Lending/Predatory Lending component of the CRA Examination
We have some reservation about dealing with fair lending issues in
the context of the CRA examination and performance evaluation.
When indications arise during the CRA examination which suggest
the possibility that discrimination may have taken place, the Examiners
should investigate the matter fully and deal with it as appropriate
and is the current practice. Ideally fair lending considerations
should affect the CRA rating only if they substantially subvert
the goals of the CRA.
Specific identification
of “asset based” lending or “equity
stripping” as an abusive and predatory practice is not unreasonable.
However, any attempt to provide a list of specific identified “abuses” offers
a great chance that credit availability will be curtailed. In addition,
the longer the list the greater chance that the list will be interpreted
as all inclusive. Loan provisions are not by nature predatory, but
some could be used in an abusive and/or deceptive way to take advantage
of unsuspecting borrowers. Whether specific loan provisions in an
individual case are abusive or deceptive must be determined by judicious
review of all the circumstances surrounding their use, and the impact
such use has on the borrower.
CRA credit for mortgage loan originations and purchases.
When mortgage loans are purchased by an institution, several factors
are usually present. One, the purchasing bank is servicing its
assessment area by accepting the risk and responsibility for mortgage
credits already issued to low and moderate income individuals in
the community. Second, the selling institution frees up capital
for further lending or investment. This allows the two institutions
to take full advantage of their individual financial and marketing
strengths in bringing mortgage credit to low- and moderate-income
individuals. The selling bank could not make further loans without
the liquidity provided by the purchasing bank. Both banks deserve
100% CRA credit for their respective participation, one the originations,
and the other the purchases.
We appreciate the opportunity afforded us to comment on the Community
Reinvestment Act Regulations, and hope that these comments will contribute
to an improved Regulation, one which will even more effectively achieve
the high standards of the Community Reinvestment Act.
Sincerely,
Gary S. Washington
Senior Vice President
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