From: Dawn Swanson [mailto:firstname.lastname@example.org]
Sent: Thursday, October 14, 2004 5:50 PM
Subject: Streamlined CRA Exam; RIN number 3064-AC50
28476 Hogan Ave.
Randolph, MN 55065
October 14, 2004
Dear Comments to FDIC:
As a community banker, I join my fellow community bankers throughout the
nation in strong support of the FDIC's proposal to increase the asset size
limit of banks eligible for the streamlined small-bank CRA examination. I
also strongly support the elimination of the separate holding company
The proposal will greatly alleviate unnecessary paperwork and examination
burden without weakening our commitment to reinvest in our communities.
Reinvesting in our communities is something we do everyday as a matter of
good business. My community bank will not long survive if my local community
doesn't thrive, and that means my bank must be responsive to community needs
and promote and support community and economic development.
Making it less burdensome to undergo a CRA exam by expanding eligibility
for the streamlined exam will not change the way my bank does business. In
fact, it will free up human and financial resources that can be redirected
to the community and used to make loans and provide other services.
It is important to remember that the streamlined CRA exam is not an
exemption from CRA. It is a more cost effective and efficient CRA exam.
Banks subject to the simplified CRA exam are still fully obligated to comply
with CRA. Just as now, community banks would continue to be examined to
ensure they lend to all segments of their communities, including low- and
moderate-income individuals and neighborhoods. It just doesn't make sense
and is inequitable to evaluate a $500 million or $1 billion bank using the
same exam procedures as for $100 billion or $500 billion bank.
One of the problems with the current large bank CRA exam is that the
definition of "qualified investments" is too limited, and qualified
investments can be difficult to find. As a result, many community banks
(especially those in rural areas) have to invest in regional or statewide
mortgage bonds or housing bonds and the like to meet CRA requirements. These
investments may benefit other areas of the state or region, but they
actually take resources away from the bank's local community. Community
banks and communities would be better off if the banks could truly reinvest
those dollars locally to support their own local economies and residents.
For this reason, I find that the FDIC's proposed community development
requirement for banks between $250 million and $1 billion is more flexible
and more appropriate than the large bank investment test. The advantage to
this proposal is that it continues to focus on community development, but
considers investments, lending and services. It would let community banks
pursue community development activities that both meet the local community's
needs and make sense in light of the bank's strategic strengths.
Similarly, the proposal will help rural banks meet the special needs of
their communities by expanding the definition of "community development" so
that it includes activities that benefit rural residents in addition to low-
and moderate-income individuals. Rural banks are frequently called upon to
support needed economic or infrastructure development such as school
construction, revitalizing Main Street, or loans that help create needed or
better-paying jobs. These activities should not be ineligible for CRA credit
because they do not benefit only low- or moderate-income individuals.
The FDIC's proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more and more community
banks like mine will find they cannot sustain independent existence because
of the crushing regulatory burden, and will opt to sell out. For many small
towns and rural communities, the loss of the local bank is a major blow to
the local community. By easing regulatory burden, it will make it easier for
community banks like mine to continue to provide committed service to local
communities that few other financial service providers are willing to do.