Pacific Community Ventures
September 3, 2004
Mr. Robert E. Feldman Executive Secretary
Attention: Comments/Legal
ESS
Federal Deposit Insurance Corporation
550 17th St. NW 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
Pacific Community Ventures urges you to withdraw your proposed changes
to the Community Reinvestment Act (CRA) regulations. CRA has been
instrumental in increasing homeownership,'boosting economic development,
and expanding small businesses in the nation's immigrant, low- and
moderate-income, and people of color communities.
Under the current CRA regulations, 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 state-charted banks with assets
between $250 million and $1 billion. In place of the investment and
service parts of the CRA exam, the FDIC proposes to add a community
development criterion. The community development criterion would
require mid-size banks with assets between $250 million and $1 billion
to engage in only one of three activities: community development
lending, investing or services. Currently, mid-size banks must engage
in all three activities.
If enacted, 879 state-chartered banks with over $392 billion in
assets would become eligible for the streamlined and cursory exam.
In total, 95.7 percent or more than 5,000 of the state-charted banks
that the FDIC regulates have less than $1 billion in assets. These
5,000 banks have combined assets of more than $754 billion. In California,
there are 146 state-chartered banks located within urban areas. 122
of these or 84% have assets up to $1 billion and would be eligible
for the streamlined exam.
In rural California, there are 9 state chartered financial institutions
with 8 of these having assets up to $1 billion. If enacted, 89% of
California's rural financial institutions would become eligible for
the
streamlined exam. The FDIC proposal would significantly harm community
development activities in rural areas. The proposal states that
a bank's rural community development activities could benefit any
group of individuals instead of only low- and moderate-income individuals.
The FDIC's proposal would eliminate the small business lending data
reporting requirement for mid-size banks. Mid-size banks with assets
between $250 million and $1 billion will no longer be required to
report small business lending by census tracts or revenue size of
the small business borrowers.
In sum, the FDIC's proposal is directly opposite CRA's statutory
mandate of imposing a continuing and affirmative obligation to meet
community needs. The proposed changes will dramatically reduce community
development lending, investing, and services. The proposal will particularly
affect rural areas least able to afford reductions in credit and
capital. Eliminating critical data on small business lending will
also result in further reductions to the amount and type of small
business lending. The Federal Reserve Board and the Office of the
Comptroller of the Currency have recognized the harm this proposal
would cause.
CRA is a vital reinvestment tool. If the FDIC refuses to reverse
this proposed course of action, we will ask that Congress halt your
efforts.
Sincerely,
Penelope Douglas
President & Co-Founder
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