Citizens
Bank & Trust Company
From: Jim Williams
Sent: Monday, March 15, 2004 4:51 PM
To: Comments
Subject: CRA Examination Process
To: Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
I strongly support
increasing the asset-size of banks eligible for the small bank streamlined
CRA
examination process as a vitally important
step in revising and improving the CRA regulations and in reducing
regulatory burden. As the Agencies state in their proposal, raising
the small institution CRA examination threshold to $500 makes numerically
more community banks eligible. However, in reality raising the asset
threshold to $500 million and eliminating the holding company limitation
would retain the percentage of industry assets subject to the large
retail institution test. It would decline only slightly, from a little
more than 90% to a little less than 90%. That decline, though slight,
would more closely align the current distribution of assets between
small and large banks with the distribution that was anticipated when
the Agencies adopted the definition of “small institution.” Thus,
the Agencies, in revising the CRA regulation, are really just preserving
the status quo of the regulation, which has been altered by a drastic
decline in the number of banks, inflation and an enormous increase
in the size of large banks.
I believe that
the Agencies need to provide greater relief to community banks than
just preserve
the status quo of this regulation. While the
small institution test was the most significant improvement of the
revised CRA, it was wrong to limit its application to only banks below
$250 million in assets, depriving many community banks from any regulatory
relief. Currently, a bank with more than $250 million in assets faces
significantly more requirements that substantially increase regulatory
burdens without consistently producing additional benefits as contemplated
by the Community Reinvestment Act. In today’s banking market,
even a $500 million bank often has only a handful of branches. I recommend
raising the asset threshold for the small institution examination to
at least $1 billion. Raising the limit to $1 billion is appropriate
for two reasons. First, keeping the focus of small institutions on
lending, which the small institution examination does, would be entirely
consistent with the purpose of the Community Reinvestment Act, which
is to ensure that the Agencies evaluate how banks help to meet the
credit needs of the communities they serve. Second, raising the limit
to $1 billion will have only a small effect on the amount of total
industry assets covered under the more comprehensive large bank test.
I also support eliminating the separate holding company qualification
for the small institution examination, since it places small community
banks that are part of a larger holding company at a disadvantage to
their peers and has no legal basis in the Act.
While community banks, of course, still will be examined under CRA
for their record of helping to meet the credit needs of their communities,
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.
James R. Williams
President
Citizens Bank & Trust Company
P.O. Box 339
Eastman, GA 31023
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