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Economic Justice Project

From: Richard Marsico 
Sent: Monday, December 19, 2005 12:49 AM 
To: Comments 
Subject: Comments on RIN No. 3064-AC97 

The Economic Justice Project of the Justice Action Center New York Law School
47 Worth St.
New York, NY 10013

December 18, 2005

Re: RIN No. 3064-AC97

To the Federal Deposit Insurance Corporation:

I am a professor of law at and director of the Economic Justice Project of the Justice Action Center at New York Law. The Project is a member of the National Community Reinvestment Coalition. Please consider the following comments in connection with your proposed modifications to the CRA Questions and Answers.

Proposed one year lag period for consideration of community development activities in designated disaster areas or distressed or underserved middle-income rural census tracts

The proposed one year lag period is appropriate. Financial arrangements for community development projects are often complex and the timing of the projects is unpredictable. The proposed lag period is long enough to allow for this but not so long that banks will receive credit for projects too remote in time from the disaster or the designation as distressed or underserved.

Proposed use of official designation of the start and expiration of disaster area status as the trigger for CRA community development eligibility status

The proposed use of the official governmental designation of the start and expiration of disaster area status is a clear way to measure the point at which community development activities in disaster areas will receive CRA credit.

Proposed differential treatment of community development activities in designated disaster areas

It is appropriate for the agencies to evaluate community development activities in designated disaster areas differently based on the degree to which they meet community needs, and to give more credit to those activities that are most responsive to community needs, including the needs of low- and moderate-income individuals. It is logical to give more credit to activities that meet the most dire needs in disaster areas because those are likely to be the most difficult to meet. A loan to restore a country club, for example, although important, is likely not as important or difficult to make in a disaster area as a loan to a small business to replace inventory or to a homeowner to make repairs.

Community development activities that get CRA credit in underserved middle-income rural census tracts

The proposal appropriately requires infrastructure, facility, or affordable housing activities in underserved middle-income rural census tracts to serve low- and moderate-income individuals in order to earn CRA credit. However, the Q and A should require that a signikficant percentage of the people served by the activity are low- or moderate-income.

Proposed clarification that the provision of financial services to low- and moderate-income individuals through branches and other facilities constitutes a community development service

The Q and A should state that provision of services through branches will earn more credit than provision of services through other facilities. Branches have proven the most effective way for providing banking services to residents of low- and moderate-income neighborhoods. The existence of branches give residents of low- and moderate-income communities alternatives to high-cost check cashing operations and pay day lenders. The CRA Q and A should use quantitative standards to measure a bank’s branch services to low- and moderate-income neighborhoods. For example, the agencies should compare the percentage of a bank’s branches in low- and moderate-income neighborhoods with the percentages of similar banks.

Proposed requirement that intermediate small banks cannot ignore community development loans, investments, or services in order to satisfy the community development test

The proposal appropriately states that a bank cannot ignore any of the categories of community development activities in order to receive a passing grade on the community development test. All three activities are essential to low- and moderate-income communities, and a bank should not be able to ignore any of them.

Thank you for this opportunity to submit comments.

Yours truly,

Richard Marsico
Professor of Law
Director, Economic Justice Project

 


Last Updated 12/20/2005 Regs@fdic.gov

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