To:
Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E St. SW,
Washington 20219
Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429
Regulation Comments, Attention: No. 2004-04
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street NW
Washington DC 20552
Dear Officials of Federal Bank and Thrift Agencies:
As a community based organization, Community Reinvestment Acceptance
Group urges you to withdraw the proposed changes to the Community
Reinvestment Act (CRA) regulations. The CRA has been instrumental in
increasing access to homeownership, boosting economic development, and
expanding small businesses in the nation’s minority, immigrant, and low-
and moderate-income communities. Your proposed changes are contrary to
the CRA statute because they will significantly impede the progress made
in community development and reinvestment.
The proposed CRA changes will thwart the Federal Administration’s
goals of improving the economic status of immigrants and creating 5.5
million new minority homeowners by the end of the decade. The proposed
changes include three major elements: 1) provide streamlined and cursory
exams for banks with assets between $250 million and $500 million; 2)
establish a weak predatory lending compliance standard under CRA; and 3)
expand data collection and reporting for small business and home
lending. The beneficial impacts of the third proposal are overwhelmed by
the damage imposed by the first two proposals. In addition, the federal
banking agencies did not update procedures regarding affiliates and
assessment areas in their proposal, and thus missed a vital opportunity
to continue CRA’s effectiveness.
Regarding streamlined and cursory exams - under the current CRA
regulations, large banks with assets of at least $250 million are rated
by performance evaluations that scrutinize their level of lending,
investing, and services to low- and moderate-income communities. The
proposed changes will eliminate the investment and service parts of the
CRA exam for banks and thrifts with assets between $250 and $500
million. The proposed changes would reduce the rigor of CRA exams for
1,111 banks that account for more than $387 billion in assets and have
the greatest connectivity with low and moderate income communities that
have the greatest need for the benefits that the CRA is intended to
drive.
The elimination of the investment and service tests for more than
1,100 banks translates into considerably less access to banking services
and capital for underserved communities. For example, these banks would
no longer be held accountable under CRA exams for investing in Low
Income Housing Tax Credits, which have been a major source of affordable
rental housing needed by large numbers of immigrants and lower income
segments of the minority population. Likewise, the banks would no longer
be held accountable for the provision of bank branches, checking
accounts, Individual Development Accounts (IDAs), or debit card
services. Thus, the effectiveness of the Administration’s housing and
community development programs would be diminished. Moreover, the
federal bank agencies will fail to enforce CRA’s statutory requirement
that banks have a continuing and affirmative obligation to serve credit
and deposit needs if they eliminate the investment and service test for
a large subset of depository institutions.
The proposed changes to CRA will directly undercut the
Administration’s emphasis on minority homeownership and immigrant access
to jobs and banking services. The proposals regarding streamlined exams
and the anti-predatory lending standard threaten CRA’s statutory purpose
of the safe and sound provision of credit and deposit services. The
proposed data enhancements would become much more meaningful if the
agencies update procedures regarding assessment areas, affiliates, and
the treatment of high cost loans and purchases on CRA exams. CRA enables
the benefits and services of our powerful banking system work for all
Americans. CRA is too vital to have its scope and impact reduced at a
time of continued consolidation in the banking industry and increases in
the number of unbanked Americans. Thank you for your attention to this
critical matter.
Sincerely,
Peter J. Fitzsimmons
Principal
CRA Group, LLC
18310 Montgomery Village Avenue
Suite 300
Gaithersburg, MD 20879
301.869.5841 www.cragroupllc.com
