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EAST BAY HABITAT FOR HUMANITY
September 1, 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:
East Bay Habitat for Humanity 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,
Joel T. Mackey
CEO
Cc: Senators John Kerry and John Edwards |
