| Commonwealth National
Bank Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman:
I am the President of Commonwealth National Bank, a $160 million bank
located in Worcester, Massachusetts. As a community banker, I strongly
endorse the federal bank regulators' proposal to increase the asset size
of banks eligible for the small bank streamlined Community Reinvestment
Act (CRA) examination from $250 million to $500 million and elimination
of the holding company size limit (currently $1 billion). This proposal
will greatly reduce our regulatory burden.
The small bank CRA examination process was an excellent innovation.
As a community banker, I applaud the agencies for recognizing that it is
time to expand this critical burden reduction benefit to larger
community bank. At this critical time for the economy this will allow
more community banks to focus on what they do best-fueling America's
local economies. When a bank must comply with the requirements of the
large bank CRA evaluation process, the costs and burdens increase
dramatically. Since we have to allocate resources to CRA compliance that
reduces our ability to meet the credit demands of the community. For
example in my bank it costs us over $20 thousand in personnel costs for
CRA compliance. That time could be used to better serve our customers
needs, increase our efficiencies and make our bank stronger in the long
run.
Adjusting the asset size limit also more accurately reflects
significant changes and consolidation within the banking industry in the
last 10 years. To be fair, banks should be evaluated against their
peers, not banks hundreds of time their size. The proposed change
recognizes that it's not right to assess the CRA performance of a $500
million bank or a $1 billion bank with the same exam procedures used for
a $500 billion bank. Large banks now stretch from coast-to-coast with
assets in the hundreds of billions of dollars. It is not fair to rate a
community bank using the same CRA examination. While the proposed
increase is a good first step the size of banks eligible for the
small-bank streamlined CRA examination should be increased eventually to
$2 billion, or $1 billion
at a minimum.
Ironically, community activists seem oblivious to the costs and
burden while at the same time objecting to bank mergers that remove the
local bank from the community. This is contradictory. If community
groups want to keep the local banks in the community where they have
better access to decision-makers, they must recognize that regulatory
burdens are strangling smaller institutions and forcing them to consider
selling to larger institutions that can afford the burdens by passing
the cost along to their customers.
Increasing the size of the banks eligible for the small-bank
streamlined CRA examination does not relieve banks from CRA
responsibilities. Since the survival of many community banks is closely
intertwined with the success and viability of their communities, the
increase will merely eliminate some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks
eligible for the small bank streamlined CRA examination process is an
important first step to reducing regulatory burden. I also support
eliminating the separate holding company qualification for the
streamlined examination, since it places small community banks that are
part of a larger holding company at a disadvantage to their peers. While
community banks still must comply with the general requirements of CRA,
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. I also urge the agencies to seriously
consider raising the size of banks eligible for the streamlined
examination to $2 billion in assets to better reflect the current
demographics of the banking industry.
Sincerely,
Commonwealth National Bank
Charles R. Valade
President/CEO
33 Waldo St
Worcester, MA 01613 | 
