From: Ray Kaltenbaugh
Sent: Tuesday, March 09, 2004 3:05 PM
To: Comments
Subject: Community Reinvestment Act Regulation
Ray Kaltenbaugh
PO Box 38
Sandy Lake, PA 16145
March 9, 2004
Dear FDIC:
As a community banker with over 30 years experience in banking,
I strongly
endorse the federal bank regulators' proposal to increase the asset
size
of banks eligible for the small bank streamlined Community Reinvestment
Act exam from $250 million to $500 million. This proposal will greatly
reduce regulatory burden. I am the President of Mercer County State
Bank,
a $245 million asset sized bank located in Sandy Lake, Pennsylvania.
The small bank CRA exam process was a great innovation. As a community
banker that is about to have our bank categorized as a large bank,I
applaud the agencies for realizing it is time to expand this critical
burden reduction for somewhat larger banks. (I don't feel that anyone
would debate that $500 million is certainly a small bank in today's
market!) When a bank must comply with the requirements of the large
bank
CRA evaluation, the costs and burdens increase substantially. It
is
difficult to estimate exactly what these additional requirements
will
cost. We are sure that the time, effort and expense will be significant.
Any small benefit that may be realized will be more than offset in
taking
away from efforts in more beneficial areas of community service and
involvement.
Large banks now stretch from coast-to-coast with hundreds of billions
of
dollars in assets. It is not fair to rate a community bank with a
mega
bank using the samne CRA exam. I applaud the regulators for proposing
this change. It is needed. At the same time, I would suggest that
any
bank with assets under $1 billion should fall under the new small
bank
definition. Please realize, most of rural America served by community
banks has little in common with large baks and the large cities they
are
serving.
Community activists complain when a local bank becomes removed from
neighborhoods because of mergers and acquisitions. A reduction of
costs
and burdens increases the likelihood that community banks will stay
independent. Community groups need to realize that regulatory burdens
are
key factors in forcing smaller institutions to consider selling to
larger
institutions.
Increasing the size of banks eligible for the small-bank streamlined
CRA
exam doesn't relieve banks from CRA responsibilities. Survival of
banks
and the survival of the communities they serve are intertwined. This
increase merely eliminates some of the most burdensome requirements,
and
by doing that, frees up some time and money that can be better spent
in
service towards the local community.
In summary, I believe that increasing the asset-size of banks eligible
for
the small bank streamlined CRA exam is an important first step to
reducing
regulatory burden. I also support eliminating the separate holding
company qualification for the streamlined exam, since it places small
community banks that are part of a larger holding company at a
disadvantage to their peers. While community banks still must comply
with
the general requirements of CRA, this change will eliminate some
of the
most problematic and burdensome elements of the current CRA regulation
from community banks that are drowning in regulatory red-tape. I
also
urge the agencies to seriously consider raising the size of banks
eligible
for the streamlined exam to $1 billion in assets to better reflect
the
current demographics of the banking industry.
I applaud the regulators seeing this need for change. It is a change
that
will benefit local communities and the community banks that serve
them.
Sincerely,
Ray Kaltenbaugh
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