SENATOR DENISE MORENO DUCHENY
August 31, 2004
Mr. Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th
St. NW
Washington, DC 20429
Attention: Comments/Legal ESS
RE: RIN 3064-AC50 Dear Mr. Felman:
I am writing to express my strong opposition to the FDIC's proposal
to raise to $1 billion the threshold for assets at which financial
institutions will be subject to a full examination for compliance
with the Community Reinvestment Act (CRA).
In essence, this proposal exempts mid-size banks with assets greater
than the current $250 million threshold and less than the proposed
$1 billion threshold from the Service and Investment tests of the
CRA. This represents 95.7 percent of the state-charted banks your
agency regulates.
As a result, such banks will no longer be required to invest in
economic and community development activities that benefit low-income
households. They will no longer be required to provide affordable
banking services, and checking and savings accounts to consumers
with modest incomes. They will no longer be required to respond to
the service needs of immigrants such as low cost remittances overseas.
Nor will they be required to maintain branches or provide other community
services in low income communities.
This proposal flies in the face of the intent of the CRA that banks
should serve all income groups in the communities they draw funds
from. Moreover, there is no justification for this proposal given
the fact that banks have proven they can make a profit providing
such financing and services.
The proposal also allows financial institutions to claim credit
for community development activities in rural areas that benefit
any group of individuals, not just low- and moderate-income
individuals. This will allow banks to cherry-pick and focus on affluent
residents of rural areas rather than the lower income consumers
CRA targets.
Finally, you would also eliminate publicly available data on the
small business lending of mid-sized banks. Without data, community
groups and citizens cannot hold banks accountable for lending to
small businesses in their neighborhoods.
As a California state legislator who represents low-income and immigrant-rich
communities both in urban San Diego County and the rural Coachella
and Imperial Valleys, I understand the critical financial needs of
low-income individuals and businesses. Instead of decreasing access
to community and economic development assistance, we desperately
need to expand such access.
I urge the FDIC to rescind these proposed changes to the CRA regulations
and renew its commitment to the goal of ensuring access to financial
capital and services for low- and moderate-income communities across
America.
Sincerely
Denise Moreno Ducheny
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