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SOUTH SUBURBAN HOUSING CENTER
September 24, 2004
Mr. Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
RE: Community Reinvestment -- RIN 3064-AC50
Dear Mr. Feldman:
I am writing on behalf of the South Suburban Housing Center to oppose
the Federal Deposit Insurance Corporation (FDIC) proposed changes to the
Community Reinvestment Act (CRA). If the FDIC adopts these changes,
community development activity in low- and moderate-income neighborhoods
and rural areas throughout our south Chicago metropolitan region and the
nation will be threatened.
The FDIC's decision is harmful for a number of reasons. First, the
FDIC is the primary regulator of many state chartered banks that
frequently fall between $250 million and $1 billion in assets. For
institutions active in Illinois in 2003, nearly 40 percent of assets
controlled by FDIC-regulated institutions were held by banks with assets
between $250 million and $1 billion. Additionally, the proposed changes
would dramatically affect the presence of FDIC-regulated institutions in
Illinois' LMI and rural communities. An analysis of 2003 banking offices
in Illinois urban areas indicates that increasing the asset size of
small banks to $1 billion would decrease the number of FDIC-regulated
banking offices in Illinois LMI census tracts operated by "large" banks
by 63 percent. Deposits in LMI branches held by "large" FDIC-regulated
banks would decline by 68 percent. FDIC-regulated branches controlling
neatly $3.4 billion in LMI deposits, or over. 10 percent of all LMI
deposits state-wide, would shift from "large" to "small" institution
status if the asset size of small banks were to increase to $1 billion.
Rural areas will be hard hit as well. Just over 1 percent of rural
Illinois banking offices operated by FDIC regulated institutions would
be held by "large" banks, a decline of 91.5 percent. This shift would
represent nearly 8 percent of rural deposits state-wide.
The proposed changes would reduce the number of financial
institutions considered "large" for CRA purposes. Our organization fears
this will threaten access to investments, grants, and services for low-
and moderate-income (LMI) communities served by large institutions that
would shift to "small" status under the regulators' proposal. There is a
significant concern that areas predominantly served by mid-sized
institutions will be particularly hard hit.
We oppose these changes to the Community Reinvestment Act and ask
that FDIC drop this proposal.
Sincerely,
John R. Petruszak
Executive Director
South Suburban Housing Center
Homewood, IL |
