Illinois Facilities Fund
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429
Dear Mr. Feldman
The Illinois Facilities Fund (IFF) supports the current structure of
the Community Reinvestment Act (CRA) because of the positive impact it
has had on the Community Development Financial Institution (CDFI)
industry. The proposed changes to CRA may adversely impact CDFIs by
discouraging private sector investment in the industry. Such unintended
consequences are particularly untimely in the face of economic
contraction and the vital role that CDFIs can play in bringing capital
to stimulate the economy in particularly distressed market sectors.
For the IFF, which offers lending, facilities planning and
development, research and related education and advocacy to Illinois
nonprofits serving low-income and special needs populations, the
proposed changes to CRA may negatively affect the continued ability to
expand our below-market financing services and products to additional
communities and organizations throughout the state, at a time when our
market research indicates a growing need for our services. Since 1989,
the IFF has made 287 loans totaling more than $70 million to help over
190 Illinois nonprofits serving low-income and special needs populations
buy, expand or renovate their facilities. The IFF has also provided real
estate services, including real estate consulting, development, and
project management services to over 90 nonprofit organizations.
The Community Reinvestment Act (CRA) has promoted investments by
traditional financial institutions in CDFIs. For instance, since the
inception of the IFF, 10 banks have invested in our loan program,
lending over $29 million at below market rates. This financing is
essential to the IFF’s track record of helping to create or maintain
7,500 of jobs and developing almost 3.7 million square footage of new
real estate in traditionally financially underserved markets. Like the
IFF, other CDFIs throughout the country, have benefited from similar
bank investments and have the resources to specialize in providing
financial services and capital to individuals, small businesses,
religious or nonprofit community-based organizations in low-income or
economically under-invested markets.
A significant number of financial institutions in Illinois’ smaller
municipalities and rural areas have less than $500 million in assets and
therefore fall within the regulatory category currently facing proposed
oversight changes. These institutions are a potent source of
partnership, deal flow and investment for the IFF, as it implements its
strategic plan to increase market penetration in Illinois’
municipalities. There will be less incentive for financial institutions
to partner with CDFIs and others engaged in community development work
if financial institutions with between $250 and $500 million in assets
are to be excluded from the three-part CRA test as proposed. In Illinois
alone, this change will affect 93 banks, including many outside of the
Chicago metropolitan area. The IFF encourages the strengthening and
modernizing of CRA to provide increased rather than decreased
opportunities for community development organizations, such as CDFIs, to
partner with financial institutions.
A bank with assets of $250 million or more has the resources to offer
the range of lending, investment, and service products evaluated on the
larger bank exam. Past studies have shown that complying with CRA data
collection requirements require less than ten hours a year in work for
these smaller banks. CRA should encourage small banks to invest and
partner with CDFIs by awarding those banks investing in CDFIs with a
higher rating. This would allow for the continued expansion and support
of the CDFI Industry and ensure individuals, communities, human service
organizations and businesses have access to capital to reach their
financial goals.
The IFF applauds the federal regulators for increasing the data
available on financial institutions. This information will provide the
public with additional information on the lending practices of financial
institutions and potentially increase partnership opportunities for
CDFIs.
Robust implementation of CRA has been vital not only for the IFF, but
to the growth and sustainability to the Community Development Finance
industry and its ability to provide financial services and products to
traditionally underserved communities throughout the county. The
proposed changes for banks with assets under $500 million should be
reconsidered and withdrawn in order to ensure the continued growth of
this important industry.
Sincerely,
Elizabeth A. Evans
Director of Government and Community Affairs
Illinois Facilities Fund
300 West Adams St., Suite 431
Chicago, IL 60606
