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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

Mercy Housing

September 16, 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:

As a member of the National Community Reinvestment Coalition, Mercy Housing, Inc. urges you to withdraw the proposed changes to the Community Reinvestment Act (CRA) regulation. 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. Your proposed changes are contrary to the CRA statute and Congress' intent because they will slow down, if not halt, the progress made in community reinvestment.

The proposed changes will thwart the Administration's goals of improving the economic status of immigrants and creating 5.5 million new minority homeowners by the end of the decade by dramatically diminishing banks' obligation to reinvest in their 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 effort to provide investments and services.

The proposal would make 879 state-charted 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. The combined assets of these banks rival that of the largest banks in the United States, including Bank of America and JP Morgan Chase. The proposed changes will drastically reduce, by hundreds of billions of dollars, the bank assets available for community development lending, investing, and services.

The elimination of the service test will also have harmful consequences for low- and moderate-income communities. Mid-size banks will no longer make sustained efforts to provide affordable banking services, and checking and savings accounts to consumers with modest incomes. Mid-size banks will also not respond to the needs for the growing demand for services needed by immigrants such as low cost remittances overseas.

Another destructive element in the proposal is the elimination of the small business lending data reporting requirements for mid-size banks. Mid-size banks with assets between $250 million and $1 billion will 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 been responsible for increasing access to credit precisely because disclosure holds banks accountable. The proposal will decrease access to credit for small businesses, which is directly contrary to CRA's goals.

In sum, the proposal is directly the opposite of CRA's statutory mandate of imposing a continuing and affirmative obligation to meet community needs. It will dramatically reduce community development lending, investing, and services. Low- and moderate-income folks in rural areas, who are least able to afford reductions in credit and capital, will be seriously harmed. We urge you to withdraw this proposal.

Sincerely,

Sister Lillian Murphy, RSM
President and CEO Mercy Housing, Inc.

cc:  National Community Reinvestment Coalition (fax: 202-628-9800)
President George W. Bush (fax: 202-456-2461)
Senator John Kerry (fax: 202-224-8525)
Senator John Edwards (fax: 202-228-1374)

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

Last Updated: August 4, 2024