SAN DIEGO HOUSING FEDERATION
September 2, 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:
The San Diego Housing Federation 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.
The San Diego Housing Federation is a coalition of affordable housing
developers,
lenders, local governments and social services agencies pursuing the
development of
affordable housing in San Diego County. We sit on the San Diego
Reinvestment Task
Force performance review subcommittee where we review the annual CRA
performance of the banks operating here. This gives us a chance to see
how the banks
are meeting their CRA goals, but it also connects the banks those that
are doing
community development. In addition to the impacts of this change
outlined above, it
would in great part eliminate the effectiveness of those reviews because
the banks will
not have the data to report. Please withdraw this planned action.
Sincerely,
Tom Scott
Executive Director
San Diego Housing Federation
450 B Street, Suite 1010
San Diego, CA 92101
