Federal Deposit
Insurance Corporation

Delaware Community Reinvestment Action Council


January 4, 2006

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

RIN 3064-AC97

Dear Mr. Feldman:

On behalf of the Delaware Community Reinvestment Action Council, Inc., (DCRAC), I want to thank you for the opportunity to comment on the proposed changes to Question and Answer (Q&A) document that provides guidelines to CRA examiners, banks, and the general public about how the CRA tests will be conducted. DCRAC is a fair lending/fair housing advocacy organization in Delaware and a member of the National Community Reinvestment Coalition.  

Financing community development activities in geographical areas impacted by natural disasters: Thank you for recognizing that for community redevelopment to occur, the one year of additional time is important.  We also applaud the provision of more “weight” to community development activities that are most responsive to the needs of low- and moderate-income individuals impacted by the natural disaster.  Your proposal to provide CRA points for investments that benefit families displaced by disasters promises to help in the rebuilding efforts.

Community development services’ emphasis on low-cost banking services for low- and moderate-income consumers:  Upon finalizing this Q & A process, we hope that banks providing low cost banking services will receive CRA points and banks providing abusive products will be penalized in their CRA exam.

CRA exam criterion for mid-size banks (assets between $250 million to $1 billion) that assesses provision of services through branches and other facilities:  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. Therefore, this criterion must be clarified to include an examination of the number and percent of branches in low- and moderate-income communities. 

We oppose the proposition that provides CRA points for financing middle- and upper-income housing developments in distressed rural middle-income census tracts.  We urge you instead to provide points for mixed-income housing, which is addressed elsewhere in the existing Q & A document and in your proposed questions.  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.

Mid-size banks must offer community development loans, investments and services:   We applaud this reiteration and 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.

Addition of an anti-predatory provision to the CRA regulations:  We applaud the proposal that will penalize banks for illegal, abusive, and discriminatory loans.  We ask that you add a Q & A 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.

Thank you for consideration of our comments.

Sincerely,  

Rashmi Rangan