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FDIC Federal Register Citations


January 6, 2006

Office of the Comptroller of the Currency
250 E Street SW, Mail Stop 1-5
Washington DC 20219
RE: Docket No. 05-17

Jennifer J. Johnson
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington DC 20551
Docket No. OP-1240

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

RE: RIN 3064-AC97

Mr. Feldman:

NLIHC is offering comments regarding the proposed Community Reinvestment Act “Interagency Questions and Answers Regarding Community Reinvestment.”

NLIHC is a membership organization whose members include nonprofit housing providers, homeless service providers, fair housing organizations, state and local housing coalitions, public housing agencies, private developers and property owners, housing researchers, local and state government agencies, faith-based organizations, residents of public and assisted housing and their organizations, and concerned citizens. While our members include the wide spectrum of housing interests, we do not represent any segment of the housing industry. Rather, we focus exclusively on what is in the best interests of people who receive and those who are in need of federal housing assistance.

NLIHC appreciates the federal banking agencies efforts to clarify the CRA exam standards for assessing banks’ community development activities in distressed or underserved non-metropolitan areas and areas impacted by natural disasters.

However, we are concerned that several proposed questions could divert bank financing to infrastructure and middle or upper income housing that might only indirectly serve low and moderate income people. The agencies must implement CRA in a manner consistent with the law’s objective of expanding access to credit for low and moderate income families and communities.

NLIHC strongly opposes the question that awards CRA points for financing infrastructure, facilities, or middle and upper income housing in “underserved” rural middle income census tracts. Although the proposed question qualifies this by adding, “so long as the infrastructure, facility, or affordable housing serves low and moderate income individuals,” it goes on to give examples which suggest that merely benefiting an insignificant number of low and moderate income individuals would be adequate to meet the standard. The proposed guidance therefore is not adequate; it would be too easy to evade the spirit of the Community Reinvestment Act by, for example, financing a small percentage of housing affordable to low and moderate income households in a mixed-income project.

NLIHC also strongly opposes the question that provides CRA credit for financing middle and upper income housing or other activities in “distressed” rural middle income census tracts if such housing or other activities help to attract businesses and residents benefiting the entire community, but merely “including” low and moderate income individuals and neighborhoods. Again, it would be far too easy to evade the spirit of the law because an insignificant percentage of low and moderate income individuals might benefit.

NLIHC knows that there are many opportunities for banks in rural areas to support low income housing. Therefore, the agencies should encourage such support in the final Q&A by citing examples of rural housing programs. The final Q&A should encourage lenders to emphasize community development that supports rural low income housing first, turning to support for other housing only after exhausting low income housing support opportunities.

NLIHC asks the agencies to clarify the CRA exam criterion for mid-sized banks that assesses their provision of services through branches and other facilities. That criterion should instruct examiners to consider the record of branch openings and closings in low and moderate income communities, as well as the number and percent of branches existing in those communities.

NLIHC suggests an additional question indicating that a bank will automatically undergo a fair lending exam to test for compliance with federal anti-predatory and anti-discrimination laws when the bank or one of its affiliates has a high concentration of subprime loans to minorities, the elderly, women, low income borrowers, or communities recovering from natural disasters or experiencing shortages of credit.

NLIHC endorses four features in the proposed Q&A and offers additional improvements for two of them:

• Points for banks financing community development in areas impacted by disasters up to one year after the expiration of federal or state disaster designation.

• Extra credit for community development activities which are particularly responsive to the needs of low and moderate income households impacted by natural disaster.

• Questions aimed at identifying services important to low income people such as low-cost checking accounts, electronic transfers, and remittances.

- However, NLIHC urges the agencies to provide CRA points for low-cost banking services and penalties for abusive products such as “bounce protection.”

• The question reiterating that mid-sized banks must offer community development loans, investments, and services.

- However, NLIHC asks that the Q&A also state that qualitative factors will not be used by examiners to excuse low levels of community development lending, investments, or service.

NLIHC appreciates the opportunity to comment on the proposed CRA Questions and Answers.

Sheila Crowley




Last Updated 01/10/2006

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