Federal Deposit
Insurance Corporation

From: Michael Carper [mailto:mcarper@hdcweb.com]
Sent: Wednesday, September 15, 2004 5:36 PM
To: Comments
Cc: Dave Loughery
Subject: Community Reinvestment -- RIN 3064-AC50

Dear Mr. Feldman and Members of the FDIC,

I am the President of a private non-profit that has been developing affordable housing for more than 30 years in central Pennsylvania. Throughout those years we have enjoyed active participation in our development activities by banks both large and small. As many banks in our region have merged up in size, we have been reliant on the remaining community banks to support us in the local markets. We have seen large bank decision making move to other states or regions with little understanding of the local issues. We do business in rural, suburban and urban markets. Today HDC manages 2,049 affordable apartments in a 6 county area serving more than 3,500 residents.
Your proposed changes to the applicability of CRA could have a disastrous affect on our ability to tap into locally controlled capital causing us to lose our ability to carry out our mission. CRA has been instrumental in increasing the supply of affordable rental housing, homeownership, boosting economic development, and expanding small businesses in the nation's minority, immigrant, and low- and moderate-income communities.
Under the current CRA regulations, banks with assets of at least $250 million are rated by performance evaluations that scrutinize their level of lending, investing, and services to low- and moderate-income communities. The proposed changes will eliminate the investment and service parts of the CRA exam for state-charted banks with assets between $250 million and $1 billion. In place of the investment and service parts of the CRA exam, the FDIC proposes to add a community development criterion. The community development criterion would require banks to offer community development loans, investments or services.
The community development criterion would be seriously deficient as a replacement for the investment and service tests. Mid-size banks with assets between $250 million and $1 billion would only have to engage in one of three activities: community development lending, investing or services. Currently, mid-size banks must engage in all three activities. Under your proposal, a mid-size bank can now choose a community development activity that is easiest for the bank instead of providing an array of comprehensive community development activities needed by low- and moderate-income communities.

I believe that if the FDIC adopts its proposal, community reinvestment in rural areas will be dramatically reduced. Please do not adopt this rule.

Respectfully,