Federal Deposit
Insurance Corporation

Definition of "minority-owned"

ACB believes the definition of a minority-owned depository institution should be updated to reflect the following change: "minority means any African American, Native American, Hispanic American or Asian American."

ACB believes that 51 percent ownership by minority persons is sufficient to determine minority status. ACB also recommends that minority status be conferred on an institution in which a minority person has controlling interest, as defined by the Federal Deposit Insurance Act, 12 U.S.C. 18170)(8), and no non-minority controlling interest exists simultaneously.

ACB proposes that minority status be based solely on ownership or control by U.S. citizens and legal residents. ACB believes consideration should be given to a multi-step test:

(1)  51 percent ownership by a minority person; and/or 

(2)  minority-owned as defined by Section 308(b) of FIRREA; and or 

(3)  a majority of the board of directors, account holders, and the community which the institution serves are minority.

ACB supports a definition of "minority-owned" derived from Section 308 (b) of FIRREA. However, ACB is also concerned that confusion may exist because of other possible definitions of "minority-owned" that may be applied to depository institutions. These include:

The U.S. Small Business Administration's 2001 Survey of Minorities in Business American Indian-and Alaska Native/Asian -and Pacific Islander/Black/Hispanic -owned businesses are those for which the sole proprietor is American Indian-and Alaska Native/Asian -and Pacific Islander/Black/Hispanic, or in the case of firms with multiple owners, where 51 percent of stock interest, claims, or rights were held by American Indian-and Alaska Native/Asian -and Pacific Islander/Black/Hispanic.

Community Reinvestment Act, 12 USC 2907 (b) (1) (3)
Minority Depository Institution. The Term "minority institution" means a depository institution where more than 50 percent of the ownership or control of which is held by one or more minority individuals; and more than 50 percent of the net profit or loss of which accrues to one or more minority individuals.

ACB recommends that the FDIC attempt to reconcile such differences in language, or clarify whether such differences reflect meaningful distinctions.

Mutual Institutions
ACB supports the FDIC's view that mutual institutions will be considered minority-owned if a majority of the board of directors, account holders, and the community which the institution serves are minority.

Information Collection
ACB does not support as feasible the mandatory collection of information regarding the minority composition of account holders and community stakeholders. Should an institution self-certify its minority status, it would have the obligation to verify that self-certification by whatever means acceptable.

Self-Certification
ACB believes a process of self-certification is sufficient, subject to verification upon examination. Such a process will minimize unintended regulatory burden and facilitate the statutory mandate.

National Coordinator
ACB believes a national coordinator will serve a useful role in outreach to minority-owned depository institutions. ACB believes a more formal structure within the Division of Supervision will provide useful communication between the FDIC and minority-owned depository institutions. The national coordinator will further demonstrate the FDIC's interest in both outreach and preservation of minority institutions. ACB strongly believes the National Coordinator will be a critical liaison between federal regulatory agencies and minority-owned depository institutions.

However, ACB believes regional coordinators are as important in assisting minority-owned depository institutions because regional coordinators have direct interaction with their "local" institutions. ACB believes a national coordinator will be a clearinghouse and a link between all regional offices and minority-owned depository institutions. The national coordinator, working in conjunction with regional coordinators, should provide quarterly reports to the Chairman of the FDIC to ensure the needs and goals of minority-owned depository institutions are met.

Technical Assistance
ACB believes that technical assistance would be useful to minority-owned depository institutions. However, if at the conclusion of a scheduled examination the FDIC provides for a return visit, ACB believes this return visit should be optional, and available to minority-owned depository institutions only on request. ACB believes coordination of an optional visit should be among the responsibilities of the regional coordinator. ACB believes minority institutions value technical assistance from the FDIC and may find return visits at the conclusion of an examination to be a valuable option. Also, ACB believes better examiner training is necessary to assist minority-owned depository institutions improve benefits that might be conveyed through the examination process.

Training Opportunities
ACB believes that the FDIC should encourage the national coordinator to work with minority institutions to help identify training and educational programs. These programs would be useful to all minority-owned depository institutions. For example, programs should focus on peer group comparisons, cultural and demographic issues, small business and community development training, and management education programs. In addition, the national coordinator should evaluate individual institutions to help identify programs that will benefit that specific institution.

Preservation of minority institutions at risk of failure
ACB believes that the FDIC has an obligation to look at alternative mechanisms for maintaining the minority status of a depository institution. However, consideration must be given to costs imposed on the BIF and SAIF funds, which should not be placed at risk.

Website
ACB believes the national coordinator should survey minority-owned depository institutions on their needs in order to provide adequate recommendations for the FDIC Website. ACB agrees with the FDIC that the website should provide links to the list of minority-owned depository institutions and their trade associations, and programs that specifically affect minority-owned depository institutions.

Conclusion
ACB appreciates the opportunity to comment on this proposed Policy Statement, and will assist the FDIC in any way possible to preserve and promote minority ownership of depository institutions. Thank you for the opportunity to comment on this important matter.

Sincerely,

Charlotte M. Bahin
America's Community Bankers
Directory of Regulatory Affairs 
Senior Regulatory Counsel