| U.S. Congress-Louise
Slaughter
April 5, 2004
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
5500 17th Street, NW
Washington, DC 20429
via e-mail: comments@fdic.gov
Dear Mr. Feldman,
In 1977, Congress enacted the Community Reinvestment Act (CRA) (12
USC 2901 et seq.) to encourage banks and thrifts to meet the credit
needs of the entire community, especially low- and moderate-income
neighborhoods and individuals. As you know, the Office of the
Comptroller of the Currency (OCC), the Federal Reserve System (FRS), the
Federal Deposit Insurance Company (FDIC), and the Office of Thrift
Supervision (OTS) are the federal banking agencies charged with
evaluating CRA implementation by the nation’s banks and thrifts. These
agencies announced their intension of reviewing the regulations adopted
in 1995. After reviewing the regulations and about 400 comments on the
advanced notice of proposed rulemaking, on February 6, 2004, the OCC,
FRS, FDIC, and OTS published their joint comments concerning changes to
CRA regulations.
Having reviewed the proposed changes to the regulations and the
general comment summaries, I am concerned over several of the proposed
changes to the CRA regulations. The agencies have proposed redefining
“small institution” to mean an institution with total assets of less
than $500 million, without consideration of the assets of its holding
company. This definition doubles the asset threshold for an institution
to be classified as a small institution, reclassifying over 1,100 banks
and thrifts from large institutions to small institutions.
This is troublesome because these 1,100 banks and thrifts would no
longer be subject to the more stringent performance evaluation standards
and would instead be assessed by the less demanding performance
evaluation standards applied to small institutions. Importantly, this
means that over 1,100 institutions are no longer subject to evaluation
of their investment in the community. The CRA evaluation of
approximately 13% of the nation’s banks and thrifts would no longer be
based in part on their financial investments in community development in
low- and moderate-income areas and individuals. I fear that this will
negatively impact community reinvestment and frustrate the policies
behind CRA.
I am also concerned over proposed changes to the standards of
evaluating the credit terms and practices of banks and thrifts. Under
the proposed regulations, predatory lending will be counted against an
institution only if collateral is foreclosed or liquidated. This narrow
definition of predatory lending excludes many other disturbing lending
practices that prey on people in low- and moderate-income areas. For
example, the packing of fees into mortgage loans, high repayment
penalties, loan flipping, and mandatory arbitration will not be counted
against any bank or thrift that engages in these unfair practices.
For these reasons I feel compelled to bring forward my concerns over
the joint notice of proposed rulemaking. I urge the OCC, FRS, FDIC, and
OTS to consider seriously the impact of the proposed regulations on the
obligations of banks and thrifts to reinvest in the community.
Sincerely,
Louise M. Slaughter
Member of Congress
28th District, NY
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