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Economic Justice Project From: Richard Marsico Sent: Monday, December 19, 2005 12:49 AM To: Comments Subject: Comments on RIN No. 3064-AC97
The Economic Justice Project of the Justice Action Center New York Law
December 18, 2005
Re: RIN No. 3064-AC97
To the Federal Deposit Insurance Corporation:
I am a professor of law at and director of the Economic Justice Project of the Justice Action Center at New York Law. The Project is a member of the National Community Reinvestment Coalition. Please consider the following comments in connection with your proposed modifications to the CRA Questions and Answers.
The proposed one year lag period is appropriate. Financial arrangements for community development projects are often complex and the timing of the projects is unpredictable. The proposed lag period is long enough to allow for this but not so long that banks will receive credit for projects too remote in time from the disaster or the designation as distressed or underserved.
The proposed use of the official governmental designation of the start and expiration of disaster area status is a clear way to measure the point at which community development activities in disaster areas will receive CRA credit.
It is appropriate for the agencies to evaluate community development activities in designated disaster areas differently based on the degree to which they meet community needs, and to give more credit to those activities that are most responsive to community needs, including the needs of low- and moderate-income individuals. It is logical to give more credit to activities that meet the most dire needs in disaster areas because those are likely to be the most difficult to meet. A loan to restore a country club, for example, although important, is likely not as important or difficult to make in a disaster area as a loan to a small business to replace inventory or to a homeowner to make repairs.
The proposal appropriately requires infrastructure, facility, or affordable housing activities in underserved middle-income rural census tracts to serve low- and moderate-income individuals in order to earn CRA credit. However, the Q and A should require that a signikficant percentage of the people served by the activity are low- or moderate-income.
The Q and A should state that provision of services through branches will earn more credit than provision of services through other facilities. Branches have proven the most effective way for providing banking services to residents of low- and moderate-income neighborhoods. The existence of branches give residents of low- and moderate-income communities alternatives to high-cost check cashing operations and pay day lenders. The CRA Q and A should use quantitative standards to measure a banks branch services to low- and moderate-income neighborhoods. For example, the agencies should compare the percentage of a banks branches in low- and moderate-income neighborhoods with the percentages of similar banks.
The proposal appropriately states that a bank cannot ignore any of the categories of community development activities in order to receive a passing grade on the community development test. All three activities are essential to low- and moderate-income communities, and a bank should not be able to ignore any of them.
Thank you for this opportunity to submit comments.
|Last Updated 12/20/2005||Regs@fdic.gov|