AMERICAN BANK LAKE CITY
September 13, 2004
FDIC
"Community Reinvestment"
American Bank Lake City is pleased to have the opportunity
to comment on the proposed revisions to the Community Reinvestment
Act. We strongly support the FDiC's proposal to increase the asset
size of' banks eligible for the small bank CRA examination to SI
billion. Banks' regulatory burden has increased greatly over the
past few years with the passage of such laws as the Gramm-Leach-Bliley
Act. the USA PATRIOT Act, the FACT Act and the Check 21 Act. While
banks understand the need for banking regulations, community banks
find complying with them especially burdensome. Changing the asset
threshold to $1 billion will decrease the regulatory burden for
many community banks, leaving more time for bank employees to meet
the
credit needs of their community.
Eliminating
the holding company size requirement will also reduce the regulatory
burden for many community banks. Small banks with
sizable holding companies find complying with CRA requirements just
as difficult as small banks without sizable holding companies. When
examined under the large bank requirements based on their holding
company status. small banks that are part of sizable holding companies
are at a competitive disadvantage. Such banks should he measured
with their peers not put on the same playing field as large banks.
However we do not support adding a mandatory community development performance
criterion for banks with assets greater than $250 million
and up to $1 billion as an additional component of small bank standards.
While FDIC is concerned that it is difficult for smaller institutions
to make qualified investments, smaller institutions also have a difficult
time competing with larger more established banks for community development
loans and services.
In addition,
the proposal does not explain what the community development criterion
is or
how it will he tested. if FDIC adds community development
criterion, how would it be quantified? The proposal states "banks
would be required to engage in activities based on opportunities
in the market and the bank's strategic strengths." How will
the agency test this criterion? What if the bank uses staff' and
time resources and does not get results? In 1995. the Agencies did
away with giving CRA credit based on a bank's effort rather than
a bank's results. Is the proposal suggesting that the Agency will
again review banks based on how hard they try and not just the dollar
result of the CD loan investment or service? Such a system would
definitely increase the burden on banks because they would have to
document their efforts in addition to documenting their results.
As an alternative
the FDIC asks whether it should apply a separate community development
test. Instead of adding a community development
criterion. A separate community development test would not reduce
the burden for small banks between $250 million and $1 billion and
would require the bank to compete for the same community development
loans and activities as under the current CRA large bank requirements.
In conclusion
while we support raising the small bank threshold.
we do not support
adding new tests or criteria. Adding new
tests or criteria will defeat the FDIC's purpose of reducing regulatory
burden creating new rules that are just as onerous as the
current
rules. We tbank you very much for considering our input on this
proposal.
Sincerely,
Curt J. Van Auken
President/CEO
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