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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

PRODUCT CHANGE FAIR LENDING CENTER

September 20, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th St. NW
Washington, DC 20429

RE: RIN 3064-AC50

Dear Mr. Feldman:

On behalf of Project Change Fair Lending Center, I strongly urge you to withdraw your recently proposed changes to the Community Reinvestment Act (CRA) regulations. Nationwide, CRA has been instrumental in increasing homeownership, boosting economic development, and expanding small businesses in the nation's minority, immigrant, and low- and moderate-income communities. The proposed changes are contrary to the CRA statute and Congress' intent because they would reduce, or likely halt, the progress made in community reinvestment.

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 is seriously deficient because 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.

The proposed community development criterion will result in significantly fewer loans and investments in affordable rental housing, Low-Income Housing Tax Credits, community service facilities such as health clinics, and economic development projects. It will be too easy for a mid-size bank to demonstrate compliance with a community development criterion by spreading around a few grants or sponsoring a few homeownership fairs rather than engaging in a comprehensive and consistent effort to provide community development loans, investments, and services.

The proposal would make 879 state-chartered banks with over $392 billion in assets eligible for the streamlined and cursory exam. In total, 95.7 percent or more than 5,000 of the state-charted banks your agency regulates have less than $1 billion in assets. These 5,000 banks have combined assets of more than $754 billion. There are 32 banks in New Mexico that fall into this category.

Another negative element of the proposal is the elimination of the small business lending data reporting requirement for mid-size banks. Mid-size banks with assets between $250 million $1 billion would no longer be required to report small business lending by census tracts or revenue size of the small business borrowers. Without data on lending to small businesses, it is impossible for the public at large to hold the mid-size banks accountable for responding to the credit needs of minority-owned, women-owned, and other small businesses. Data disclosure has accountable. The proposal will decrease access to credit for small businesses, which is directly contrary to CRA's goals.

In Albuquerque, the provision of community development services, such as affordable housing, for the low- and moderate-income persons, minorities and immigrants is of paramount importance. Without CRA's continuing and affirmative obligation, our community development initiatives are in jeopardy.

Sincerely,

Margy Hernandez
Project Change Fair Lending Center Advisor
Product Change
Albuquerque, NM

cc: Senator Pete V. Domenici
Senator Jeff Bingaman
Representative Tom Udall
National Community Reinvestment Coalition

Last Updated 10/18/2004 regs@fdic.gov

Last Updated: August 4, 2024