CAP Services, Inc.
From: Karl Pnazek [mailto:kspnazek@capmail.org]
Sent: Friday, March 26, 2004 3:25 PM
To: Comments
Subject: Oppose CRA Regulations
Karl Pnazek
5499 Hwy 10 East
Stevens Point, WI 54481
March 26, 2004
Executive Secretary Robert Feldman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Executive Secretary Feldman:
Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E St. SW,
Washington 20219
Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429
Regulation Comments, Attention: No. 2004-04
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street NW
Washington DC 20552
To Officials of Federal Bank and Thrift Agencies:
As a member of the National Congress for Community Economic Development,
CAP Services, Inc. urges you to withdraw the proposed changes to
the
Community Reinvestment Act (CRA) regulations. The CRA has been an
important tool for CAP in increasing access to homeownership and
small
business loans for low- and moderate-income families in rural central
Wisconsin. The proposed changes could be harmful to our continued
use of
CRA to move lenders to make further progress in community reinvestment.
The proposed
CRA changes could also thwart the Administration’s
goals of
creating 5.5 million new minority homeowners by the end of the decade.
Specifically,
the proposal to "streamline" exams for banks
with assets
between $250 million and $500 million will affect 36 banks in Wisconsin
(10 in rural areas). These affected rural banks have 71 branches
and
represent 17.6% of all deposits in rural areas.
Let me illustrate by decribing a practical impact the current CRA
regulations have had. In 1991 CAP Services began what is today a
very
successful homebuyers assistance program that offers downpayment
and
housing rehabilitation assistance to first-time homebuyers. Despite
the
financial advantages of participation (elimination of PMI, better
loan to
value ratios, etc.), some of our regional rural lenders ($250-$500
million
in assets) chose not to participate by making loans to these households.
By establishing a record of accomplishment, doing a great deal of
lender
outreach and being very assertive with our CRA advocacy, CAP has
been able
to convince virtually all of the lenders in our area to participate
in our
program. We used the same model to encourage area lenders to participate
in our IDA (Individual Development Account) program when it was
established in 1999.
We are now working with area lenders to encourage them to participate
in
CAP's business lending program for LMI households. Any weakening
of the
CRA by "streamlining" the examiniation process could have
an adverse
impact on our efforts. We encourage you to withdraw the proposed
regulations and revisit their potential impact on rural areas again.
With
the increased regionalization of banking and the the increased use
of
standardized underwriting that reflects an urban bias against rural
lending, we need CRA in its present form more than ever.
This problem is not limited to rural Wisconsin. The proposed changes
would reduce the rigor of CRA exams for 1,111 banks nationwide that
account for more than $387 billion in assets.
The elimination of the investment and service tests for more than
1,100
banks could translate into considerably less access to banking services
and capital for underserved communities. In other areas, these banks
might no longer be held accountable under CRA exams for investing
in Low
Income Housing Tax Credits, which have been a major source of affordable
rental housing needed by the large numbers of seniors living in our
areas.
The federal regulators will also have lost an important tool for
enforcing
CRA’s statutory requirement that banks have a continuing and
affirmative
obligation to serve credit and deposit needs if they eliminate the
investment and service test for a large subset of depository institutions.
In closing, we encourage you to withdraw the proposed regulations
and
reissue them only after careful analysis of the impact of any revisions
on
rural America.
Sincerely,
Karl S Pnazek
Cap Services, Inc.
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