Federal Deposit
Insurance Corporation

Re: Docket No. 05-17, RIN 3064-AC97 

OCC
Federal Reserve Board
FDIC

I am writing from the Center for Financial Services Innovation (CFSI) in response to the joint interagency Questions and Answers of the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board and Office of the Comptroller of the Currency (OCC) on the Community Reinvestment Act. CFSI, an affiliate of ShoreBank with support from the Ford Foundation, was launched in 2004 to encourage the development of asset-building opportunities that are profitable for both customers and companies. CFSI supports the agencies’ decision to maintain the large-bank exam, and thus the service test, for banks with over $1 billion in assets. In fact, CFSI believes that to better encourage banks to fully serve the needs of all those in their communities, the service test should be strengthened. CFSI would like to see more rigorous and performance-based measures taken into consideration in the service test portion of large bank exams, including consideration of who is actually served, and specific standards and benchmarks for retail banking services.

CFSI supports the agencies’ proposal in the Q&A that “providing international remittances services that increase access to financial services by low and moderate-income persons (for example, by offering reasonably-priced international services in connection with a low-cost account)” will be counted as a community development service under the new Community Development (CD) Test. Remittances that are provided at reasonable price and terms can be important links to the financial services system. Moreover, CFSI believes that the agencies could encourage innovation and partnership by adding language that incorporates services such as stored value (prepaid) cards, payroll cards, general check cashing and bill payment services with reasonable prices and terms to the definition of products provided to lower and moderate-income people that will be counted as community development services.

However, because intermediate small banks will no longer be covered under the retail services test, CFSI encourages the agencies to add the development of new bank branches in LMI areas as a community development service, in addition to “providing financial services to low- and moderate-income individuals through branches and other facilities located in low-and moderate-income areas.” In fact, the previous sentence could be modified to include “other facilities, including workforce development centers affiliated with nonprofit organizations.”

Moreover, the Q&A should also note that financial institutions should not be required to directly provide credit counseling, homebuyer and home maintenance counseling, financial planning or other financial services education to promote community development in order to receive CRA credit. In many cases, it may be preferable for a financial institution to partner with a nonprofit organization to provide these services. The Q&A should note that any partner should provide affordable and appropriate services.

Finally, CFSI is pleased that the federal agencies direct banks to focus on low- and moderate-income families in areas impacted by natural disasters in the Q&A. The proposal to provide CRA credit for investments that benefit families displaced by disasters promises to be very beneficial to areas receiving a large influx of families resettling in the wake of future natural calamities. CFSI encourages the agencies to give similar weight to financial institutions that provide important basic financial services, such as prepaid debit cards, during times of natural disaster.

Thank you for your attention to these comments, and please do not hesitate to contact me with questions.

Sincerely,

Jennifer Tescher, Director