Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations

FDIC Federal Register Citations
Cleveland Housing Network

From: []
Sent: Tuesday, December 13, 2005 5:07 PM
To: Comments
Subject: Comments, RIN 3064-AC97

Robert E. Feldman
Executive Secretary
Attention: Comments, RIN 3064-AC97
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington DC 20429

To Whom it May Concern:

(Name of organization), a member of the National Community Reinvestment
Coalition, appreciates that the federal banking agencies have clarified how
banks will receive favorable consideration in their Community Reinvestment
Act (CRA) exams for financing community development activities in
geographical areas impacted by natural disasters.  While we are pleased
that the federal agencies direct banks to focus on low- and moderate-income
families in areas impacted by disasters, we are concerned that other
proposed questions divert bank financing to middle- and upper-income
housing.  The agencies must implement CRA in a manner that maintains the
law's central objective of ending redlining and expanding access to credit
for low- and moderate-income families and communities.

We are pleased that the agencies are proposing that banks will receive
points on their CRA exams for financing community development in
geographical areas impacted by disasters for up to one year after the
expiration of official federal or state designation of disaster status.
Community development financing takes considerable time to plan and
implement, meaning that the one year of additional time is important for
geographical areas like the Gulf Coast region that have been devastated by
natural disasters.  We also applaud the agencies for providing more
"weight" or credit to community development activities that are most
responsive to the needs of low- and moderate-income individuals that have
been impacted by the natural disaster.  Your proposal to provide CRA points
for investments that benefit families displaced by disasters promises to be
very beneficial to areas receiving a large influx of families resettling in
the wake of Hurricane Katrina and future natural calamities.

The proposed questions on community development services provide an
important emphasis on low-cost banking services for low- and
moderate-income consumers.  Low-cost checking accounts, electronic
transfers, and remittances provide critical alternatives to payday loans
and other high cost fringe products.  Low cost banking services enable
low-income consumers to save and build wealth in contrast to usurious
products that strip wealth.  Once these proposed questions are finalized,
we hope that the agencies provide CRA points for low cost banking services
and also penalize banks on CRA exams for abusive products such as bounce
protection, whose wealth stripping features are not advertised clearly to

We ask that you clarify the CRA exam criterion for mid-size banks with
assets between $250 million to $1 billion that assesses their provision of
services through branches and other facilities.  You must clarify that this
exam criterion includes an examination of the number and percent of
branches in low- and moderate-income communities.  Placing branches in low-
and moderate-income communities is vital since a recent Federal Reserve
study shows that racial disparities in high cost lending is less when banks
conduct the lending through branches as opposed to using brokers.

We oppose the proposed question and answer that provides CRA points for
financing middle- and upper-income housing developments in distressed rural
middle-income census tracts.  Elsewhere in the existing Question and Answer
document and in your proposed questions, the agencies provide credit for
mixed-income housing developments.  Mixed-income housing helps to overcome
segregation by income and is an activity worthy of CRA points if the
housing contains a significant number of low- and moderate-income families.
We therefore urge you to eliminate the possibilities of banks receiving
significant CRA points for financing middle- and upper-income housing.  We
urge you instead to provide points for mixed-income housing.

We applaud your proposed question and answer that reiterates that mid-size
banks must offer community development loans, investments and services.
Mid-size banks cannot ignore one or more of these activities.  We also
recognize that qualitative factors on CRA exams can be important, but we
ask that you add a provision to your proposed questions stating that
qualitative factors will not be employed by examiners to excuse low levels
of community development lending, investments or services.

Finally, we previously applauded your decision to add an anti-predatory
provision to the CRA regulations that will penalize banks for illegal,
abusive, and discriminatory loans.  We ask that you add a Question and
Answer indicating that a bank will automatically undergo a fair lending
exam to test for compliance with federal anti-predatory and
anti-discrimination law when the bank or one of its affiliates makes a high
concentration of subprime loans to minorities, the elderly, women,
low-income borrowers or to communities recovering from natural disasters
and experiencing shortages of credit.

The most effective way to expand access to credit to underserved borrowers
is implementing rigorous and comprehensive CRA exams that maintain the
focus on meeting the credit and deposit needs of low- and moderate-income
borrowers and communities.  If you are responsive to our comments on the
proposed Question and Answers, CRA exams will become more rigorous.

Thank you for consideration of our comments.


Kate Monter Durban
Assistant Director
The Cleveland Housing Network
2999 Payne Avenue, #306
Cleveland, OH  44114



Last Updated 12/15/2005

Skip Footer back to content