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CHARO
September 15, 2004
Mr.
Robert E. Feldman,
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit
Insurance Corporation
550 17th St. NW
Washington, DC 20429
Re: Community Reinvestment, RIN Number 3064-AC50;
Proposal to Expand Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman:
CHARO Community Development Corporation urges you to withdraw your
proposed changes to the Community Reinvestment Act (CRA) regulations.
CRA has been instrumental in increasing homeownership, boosting economic
development, and expanding small businesses in the nation's immigrant,
low- and moderate-income, and people of color communities — the minority
population comprises the majority of the population of California.
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 mid-size
banks with assets between $250 million and $1 billion to engage in only
one of three activities: community development lending; investing or
services. Currently, mid-size banks must engage in all three activities.
If enacted, 879 state-chartered banks with over $392 billion in assets
would become eligible for the streamlined and cursory exam. In total,
95.7 percent or more than 5,000 of the state-charted banks that the FDIC
regulates have less than $1 billion in assets. These 5,000 banks have
combined assets of more than $754 billion. In California, there are 146
state-chartered banks located within urban areas. 122 of these or 84%
have assets up to $1 billion and would be eligible for the streamlined
exam.
Such changes would be devastating to Californians — without these
regulations, Banks will funnel a majority of money into affordable
housing development pools — thereby eliminating capacity and grant
dollars that have been crucial to assisting intermediaries in assisting
small businesses.
In rural California, there are 9 state chartered financial institutions
with 8 of these having assets up to $1 billion. If enacted, 89% of
California's rural financial institutions would become eligible for the
streamlined exam. The FDIC proposal would significantly harm community
development activities in rural areas. The proposal states that a bank's
rural community development activities could benefit any group of
individuals instead of only low- and moderate-income individuals.
The FDIC's proposal would eliminate the small business lending data
reporting requirement 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.
In sum, the FDIC's proposal is directly opposite CRA's statutory mandate
of imposing a continuing and affirmative obligation to meet community
needs. The proposed changes will dramatically reduce community
development lending, investing, and services. The proposal will
particularly affect rural areas least able to afford reductions in
credit and capital. Eliminating critical data on small business lending
will also result in further reductions to the amount and type of small
business lending.
CRA is a vital reinvestment tool. Thank you for your consideration –
as your decision could have an adverse that would be devastating to
millions.
Sincerely,
Cynthia Amador
President & CEO
CHARO - Community Development Corporation
Los Angeles, CA
Cc: Senators John Kerry and John Edwards
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