Oklahoma Bankers Association
September 9, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: RIN Number
3064-AC50 – FDIC
Proposed Increase in the Threshold for the Small Bank CRA Streamlined
Exam
Dear Mr. Feldman:
I’m writing on behalf of the Oklahoma Bankers Association
in strong support for the FDIC’s proposal to increase the threshold
for the streamlined small bank CRA examination to $1 Billion, without
regard to the size of the bank’s holding company. Our Association
represents all but four of Oklahoma’s 268 commercial banks,
and even though this proposal would only have a direct impact on
14 member banks, we think it’s something that’s needed,
both in Oklahoma and across the nation.
In spite of what
some consumer groups and some politicians are claiming, this proposal
does not remove or exempt banks below $1 Billion from
their CRA requirements. It just addresses the exorbitant costs that
smaller banks face in trying to live up to the same standards for
CRA purposes that are imposed on trillion dollar banks. It makes
no sense to apply trillion-dollar bank standards – for CRA
or any other purposes for that matter – to small, community
banks.
Our Association joins with the American Bankers Association in
supporting the addition of a community development criterion to the
small bank examination for larger community banks. However, we believe
the FDIC should adopt its original $500 Million threshold without
a Community Development (CD) criterion.
The new
CD criterion should be applied only to banks greater than $500
Million up to
$1 Billion. In our state that’s six banks.
Community banks up to $500 Million now hold about the same percent
of overall industry assets as community banks up to $250 Million
did a decade ago when the revised CRA regulations were adopted, so
this adjustment in the CRA threshold is appropriate.
As FDIC examiners
know, it’s been difficult for small banks,
especially those in rural areas, to find appropriate CRA qualified
investments in their communities. Many small banks have had to make
regional or statewide investments that are extremely unlikely to
ever benefit the banks’ own communities or its own customers,
and – to say it as plainly as I can – this is nuts. This
certainly was not intended by Congress when it enacted the Community
Reinvestment Act so many years ago.
Importantly,
we strongly oppose making the CD criterion a test that’s separate from the bank’s overall CRA evaluation.
Such differentiation creates the impression that CD lending is different
from providing credit to the entire community. The current small
bank test considers the institution’s overall lending in its
community, as it should. The addition of a category of CD lending
(and services to aid lending and investments as a substitute for
lending) fits well within the concept of serving the whole community.
A separate test would create an additional CD obligation and regulatory
burden, eroding what we believe to be the intent of the streamlined
exam.
Finally, we
strongly support the FDIC’s proposal that would
change the definition of “community development” to include
rural residents and not just focus on low- and moderate-income area
residents. This change will go a long way toward eliminating distortions
in the current regulations that result in a small rural bank being
told to invest in regional affordable housing bonds for an urban
area not in the bank’s community.
Sincerely,
Doug Tippens, Chairman
Oklahoma Bankers Association
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