Independent Bankers Association of Texas
March 29, 2004
Communications Division
Public Information Room
Mailstop 1-5
Office of the Comptroller of the Currency
250 E Street, SW
Washington, DC 20219
Docket No 04-06
Regs.comments@occ.treas.gov
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551
Re: Docket No. R-1181
Regs.comments@federalreserve.gov
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
comments@fdic.gov
Regulation Comments
Chief Counsel’s Office
Office of thrift Supervision
1700 G Street NW
Washington, DC 20552
Attention: No. 2004-04
Regs.comments@ots.treas.gov
Re: Community Reinvestment Act Regulations
Dear Sir or Madam:
The Independent Bankers Association of Texas (IBAT) would like to
comment on the Community Reinvestment Act (CRA) proposed regulations.
IBAT is a trade association made up of approximately 650 community
banks and savings banks domiciled in Texas and Oklahoma.
The CRA was passed
some 25 years ago in response to allegations that some banks were
redlining,
or refusing to make loans in certain
areas of their communities. The law, in this respect, was to correct
an injustice to those persons within a bank’s community that
were not being served. Although we cannot categorically deny that
community banks have never redlined or refused to serve a segment
of their community, we do assert that for community banks to thrive,
they must, by their very nature, serve the communities in which they
are located. They are not like the big interstate banks that are
able to define their market area first and then locate a branch there.
Thus, IBAT takes no issue with the CRA; rather we take issue with
the way that CRA has been implemented by regulation. It is axiomatic
that regulations are burdensome inversely proportional to the size
of the bank. IBAT was pleased when the regulations were changed some
years ago to streamline examination and evaluate CRA compliance by
distinguishing large banks from small banks, with the small bank
examination procedures and evaluations being applicable to banks
with assets of up to $250 million or less.
The current proposal would apply the small bank examination procedure
and evaluation to banks with up to $500 million in assets. While
IBAT believes this is a step in the right direction, we would urge
that an even larger threshold be established. Due to consolidation
and growth, there would still be approximately 50 Texas banks exposed
to the large bank examination and evaluation procedure. It seems
unfair to us that a $500 million community bank be examined with
the same examination standards and evaluation guidelines as a multi-state
bank with hundreds of billions of dollars in assets. As an example,
the 15-page FDIC Community Investment Guide, applied to large bank
CRA evaluation, lists investment vehicles such as Qualified Housing
Projects and Community and Economic Development Entities, which may
not even exist and would be too complicated to create in communities
with banks of less than $500 million in assets.
Therefore, IBAT respectfully requests that the small bank examination
and evaluation be raised from the proposed $500 million to at least
$1 billion. As an alternative, we would suggest a mid-sized examination
procedure and evaluation category for the banks in the $500 million
to $1 billion asset size range. Increasing the size of banks eligible
for small-bank examination and evaluation does not relieve them from
their CRA responsibilities. As noted previously, community banks
must, by definition, serve their communities or they will not prosper.
Rather, we would like to see the regulatory burden, both for the
banks and the regulators, be more size-appropriate.
Thank you for the opportunity to comment.
Christopher L. Williston
Chief Executive Officer
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