GUARANTY BANK
From: Waters, John [mailto:jwaters@guaranty-bank.com]
Sent: Monday, September 13, 2004 1:36 PM
To: Comments
Subject: Comments on RIN Number3064-AC50
September 13, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Comments@FDIC.gov
Re: Community Reinvestment, RIN number 3064-AC50;
Proposal to Expand Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman:
As a community banker, I join my fellow community bankers throughout
the nation in strong support of the FDIC’s proposal to increase
the asset size limit of banks eligible for the streamlined small-bank
CRA examination. I also strongly support the elimination of the
separate holding company qualification.
The proposal will greatly alleviate unnecessary paperwork and examination
burden without weakening our commitment to reinvest in our communities.
Reinvesting in our communities is something we do everyday as a
matter of good business. My community bank will not long survive
if my local community doesn’t thrive, and that means my bank
must be responsive to community needs and promote and support community
and economic development.
Making it less burdensome to undergo a CRA exam by expanding eligibility
for the streamlined exam will not change the way my bank does business.
In fact, it will free up human and financial resources that can
be redirected to the community and used to make loans and provide
other services.
It is important to remember that the streamlined CRA exam is not
an exemption from CRA. It is a more cost effective and efficient
CRA exam. Banks subject to the simplified CRA exam are still fully
obligated to comply with CRA. Just as now, community banks would
continue to be examined to ensure they lend to all segments of
their communities, including low- and moderate-income individuals
and neighborhoods. It just doesn’t make sense and is inequitable
to evaluate a $500 million or $1 billion bank using the same exam
procedures as for $100 billion or $500 billion bank.
One of the problems with the current large bank CRA exam is that
the definition of “qualified investments” is too limited,
and qualified investments can be difficult to find. As a result,
many community banks (especially those in rural areas) have to
invest in regional or statewide mortgage bonds or housing bonds
and the like to meet CRA requirements. These investments may benefit
other areas of the state or region, but they actually take resources
away from the bank’s local community. Community banks and
communities would be better off if the banks could truly reinvest
those dollars locally to support their own local economies and
residents.
For this reason, I find that the FDIC’s proposed community
development requirement for banks between $250 million and $1 billion
is more flexible and more appropriate than the large bank investment
test. The advantage to this proposal is that it continues to focus
on community development, but considers investments, lending and
services. It would let community banks pursue community development
activities that both meet the local community’s needs and
make sense in light of the bank’s strategic strengths.
Similarly, the proposal will help rural banks meet the special
needs of their communities by expanding the definition of “community
development” so that it includes activities that benefit
rural residents in addition to low- and moderate-income individuals.
Rural banks are frequently called upon to support needed economic
or infrastructure development such as school construction, revitalizing
Main Street, or loans that help create needed or better-paying
jobs. These activities should not be ineligible for CRA credit
because they do not benefit only low- or moderate-income individuals.
The FDIC’s proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more and more
community banks like mine will find they cannot sustain independent
existence because of the crushing regulatory burden, and will opt
to sell out. For many small towns and rural communities, the loss
of the local bank is a major blow to the local community. By easing
regulatory burden, it will make it easier for community banks like
mine to continue to provide committed service to local communities
that few other financial service providers are willing to do.
Thank you for considering my views.
Sincerely,
John M. Waters
Chief Financial Officer, SVP
Guaranty Bank
302 3rd Avenue SE
Cedar Rapids, IA 52401
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