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TURTLE MOUNTAIN HOUSING AUTHORITY
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:
The Turtle Mountain Housing Authority 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 business 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 slow down, if not halt the progress made in community reinvestment,
including Indian country. The changes proposed for rural communities
will disproportionately affect tribes and Native Americans living in
tribal areas.
To this point, Native Americans living on reservations are the most
unbanked population in the United States. The Navajo Nation, for
example, has 5 bank branches in total for a population of 250,000 people
living in an area the size of West Virginia. You can see the same or
greater number of branches in a single block in our Nation's capital.
The proposed changes would only serve to worsen banking services to
tribes. ~:~ese changes, which would make smaller banks less accountable
for their community reinvestment activity alarm us, as banks are finally
waking up to the investment opportunities in Indian country. Indian
country has made strides with the help of banks in the mortgage arena
and, we believe, that the strength of the current law has been
instrumental to this development. For example, we saw conventional
mortgage activity increase from 2001 through 2003. In addition, the
recent strides in economic development in Indian country will be lost if
banks aren't required to invest. The following data point up the severe
needs in Indian country, that require a strong CRA.
According to the GAO, the rate of homeownership for Native Americans
living on reservations is just 33 percent, or half that of the general
population and substantially lower than that of other minority groups.
In addition, Native Americans are four times more likely than the
average American family to live in substandard housing. (Fannie mae
data, Testimony, Pattye Greene, May 3, 2004, House Financial Services
Committee) Overcrowding has been documented in the NAIHC study "Too Few
Rooms..." (2001) reporting as many as 25 or even 30 people living in
deplorable living conditions under one roof in a 2- or 3-bedroom house.
It is well known that smaller banks, those primarily regulated by the
FDIC, are more likely to serve rural populations, so these provisions
are disturbing to populations such as ours who are entirely rural. With
the current Administration seeking to expand minority homeownership,
these measures will certainly not help and very likely halt the recent gains in
homeownership that we have seen taking place on tribal lands.
We believe the proposed changes will thwart the Administration's goal
of creating 5.5 million new minority homeowners by the end of the
decade. Since FDIC Chairman Powell, a Bush Administration appointee is
proposing the changes, the sincerity of the Administration's commitment
to expanding homeownership and economic development is called into
question. How can an administration hope to promote community
revitalization and wealth building when it proposes to dramatically
diminish banks' obligation to reinvest in their communities?
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 would be seriously deficient as a
replacement for the investment and services tests. 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 dhoose a community
development activity 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, and 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 community development loans, Investments, and services.
Your 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. The combined assets of
these banks rival that of the largest banks in the United States,
including Bank of Ameri:,a and JP Morgan Chase. Your proposal will
drastically reduce, by hundreds of billions of dollars, the bank assets
available for community development lending, investing, and services.
Currently the Turtle Mountain Housing Authority in Belcourt, North
Dakota has a waiting list of over 1,000 people for homeownership and
rental housing.
The Elimination of the service test will also have harmful consequences
for low- and moderate-income communities. CRA examiners will no longer
expect mid-size banks to maintain and/or build bank branches in low-and
moderate-income communities. Mid-size banks will no longer make
sustained efforts to provide affordable banking services, and checking
and saving accounts to consumers with modest incomes. Banks eligible for
the FDIC proposal with assets between $250 million and $1 billion have
7,860 branches. All banks regulated by the FDIC with assets under $1
billion have 18,811 branches. Your proposal leaves banks with thousands
of branches "off the hook" for placing any branches in low- and
moderate-income communities.
Another destructive element in your proposal is the elimination of 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. Without data on lending to
small businesses, it is impossible for the public 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 for small businesses, which is directly contrary to
CRA's goals.
Lastly, and perhaps most devastating to Native Americans living in
tribal areas, your proposal that community development activities in
rural areas can benefit any group of individuals instead of only low-
and moderate-income individuals. Since banks will be able to focus on
affluent residents of rural areas, your proposal threatens to divert
community development activities away from the low- moderate-income
communities and consumers that CRA targets. Your proposal for total
America merely exacerbates the harm of your proposed streamlined exam
for mid-size banks. Your streamlined exam will result in much less
community development activity. In rural America, that reduced amount of
community development activity would earn CRA points even if it benefits
affluent consumers and communities. What's left over for low-
moderate-income total residents are the crumbs of a shrinking CRA pie of
community development activity?
In sum, your proposal is directly opposite CRA's statutory mandate of
imposing a continuing and affirmative obligation to meet community
needs. Your proposal will dramatically reduce community development
lending, investing, and services. You compound the damage of your
proposal in rural areas, which are least able to afford reductions in
credit and capital. You also eliminate critical data on small business
lending. Two other regulatory agencies, the Federal Reserve board and
the office of the Comptroller of the Currency, did not embark upon the
path you are taking because recognized the harm it would cause.
If you agency is serious about CRA's continuing and affirmative
obligation to meet credit needs, you would be proposing additional
community development and data reporting requirements for mote banks
instead of reducing existing obligations. A mandate of affirmative and
continuing obligations implies expanding and enlarging community
reinvestment, not significantly reducing the level of community
reinvestment.
CRA is too vital to be gutted by regulatory fiat and neglect. We hope
that the FDIC, which earlier this year had the vision to hold a
conference on the "unbanked," will not now introduce changes detrimental
to the most "unbanked" population of all.
Sincerely,
Andrew Laverdure, Executive Director
Turtle Mountain Housing Authority
Turtle Mountain Band Of Chippewa Indians
Cc: NAIHIC
National Community Reinvestment Coalition
President George W. Bush
Senator John Kerry
Senator John Edwards
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