Federal Deposit
Insurance Corporation

From: Jim Bowman [mailto:jbowman@naht.org]
Sent: Thursday, October 14, 2004 1:05 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

Any plan to exempt financial institutions above $250 million in assets from the CRA requirements will inhibit the flow of private community redevelopment capital to the economically deprived areas of Ohio. Less stringent adherence requirements could set a dangerous precedent for banks to pay less attention to community needs, and creative solutions to preserve affordable housing and create commercial enterprises like grocery stores, medical facilities, clean and safe recreational venues and, yes, banks in these areas will be at risk.

James Bowman
President, National Affordable Housing Trust
Columbus Ohio

CRA change would hurt Ohio

The Community Redevelopment Act (CRA) has been the foundation for making more than $1.5 trillion dollars available for community revitalization since 1977. The CRA requires that financial institutions over $250 million dollars in assets document that their investments, loans and services are distributed to all geographic areas of the communities they serve, particularly low income neighborhoods. Compliance with CRA is increasingly important as community service groups evaluate how mergers between banks will affect low income areas when the inevitable “cost cutting” measures are introduced in the form of branch and loan production office closings, and the resultant community loan, service and job losses.

The Office of Thrift Institutions (OTS) has promulgated, and the Federal Deposit Insurance Corporation (FDIC) has proposed, regulations to exempt savings and loans and banks with assets of up to $1 billion from the full CRA examination process. In Ohio, if the FDIC proposal is realized, only 26 banks would be subject to the full examination, a 68% decrease from the 82 banks presently covered by the CRA*. In addition, some rural communities could be left with no financial institutions covered by the CRA requirements.

Any plan to exempt financial institutions above $250 million in assets from the CRA requirements will inhibit the flow of private community redevelopment capital to the economically deprived areas of Ohio. Less stringent adherence requirements could set a dangerous precedent for banks to pay less attention to community needs, and creative solutions to preserve affordable housing and create commercial enterprises like grocery stores, medical facilities, clean and safe recreational venues and, yes, banks in these areas will be at risk.

Any regulatory compliance is burdensome. But if the issue for “small institutions” is the cost of compliance, then the answer is not to exempt them from the requirements of regulation that is clearly beneficial to low income families and senior citizens, as well as economically deprived areas. It is, rather, to find creative ways to make the compliance less onerous and expensive so that our financial institutions and nonprofit organizations will continue to serve all of our citizens.

• Source: FDIC-Division of Supervision and Consumer Protection- 2003

James A. Bowman
President
National Affordable Housing Trust, Columbus