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FDIC Federal Register Citations

From: Larry Wilson [mailto:LWilson@firstarkansasbank.com]
Sent: Monday, September 20, 2004 8:54 AM
To: Comments
Cc: psmith@aba.com
Subject: CRA Proposal

Dear Sirs:
I strongly support the FDIC’s proposal to increase the asset size limit of banks eligible for the streamlined small bank CRA examination to $1 billion.

As you probably are aware, the Community Reinvestment Act was put into effect as a result of abuses by larger, urban banks that blatantly avoided lending (and otherwise serving) various areas of their markets. All banks became ‘guilty’ because of the sins of a few. The truth is that the vast majority of banks in this country have more than adequately served the markets in which they are located and have done so for years without the onus of the CRA.

We (the smaller banks) have served all areas of our market for several reasons: (1.) It is the right thing to do (2.) The primary way for our banks to grow is to grow our existing markets (3.) We know our market and its needs because we live in that market, shop in that market, go to church in that market, and interact with the people of that market on a daily basis.
All the CRA has done for our bank is create paperwork that is probably never seen by anyone. We haven’t changed our lending policies because we were already serving our market and plan on doing so for many years to come. Only if the burden of unnecessary regulation and paperwork becomes too great will we sell our interest in this bank which has served this market extremely well for the 55 years of our existence.

We are the only locally owned bank in this market and we must serve this market well if we expect to thrive and prosper. We compete against branches of Bank of America, US Bank, and three other billion dollar banks---none of which see our market as anything more than a gnat on an elephant’s butt. I would venture a bet that no examiner has ever reviewed the loans of Bank of America to see if they have ever even made a loan in this market (much less serving all segments of this market!), yet the examiners spend hours poring over our loan records to verify that we are, in fact, doing our job of serving the same market. Also, the state’s largest credit union is in our market and they have no CRA requirements whatsoever. What’s fair about that?

The goal of CRA was to see that all areas and elements of a market are being served. We were doing just that for years before CRA was even a thought in someone’s head. A better approach would be to periodically look at economic data that is already available to determine that all areas of a market are being served. If they aren’t, then review the bank data in that area to determine if one or more banks are not doing their job of growing their market.

The idea of making a new “community development” criterion is overkill and, in the vast majority of markets in which smaller banks are located, is merely a duplication of what you are asking us to do to prove that we are serving our market.
The consumer groups that oppose raising the limit on small banks have no clue as to what is going on in the real world. Our bank, just like the majority of banks in the country, is seeking to make every loan we can that doesn’t carry an unreasonable risk. There is inherently more risk in lending to lower income individuals, but we do our best to see that we give those individuals every opportunity to grow and prosper. Don’t make it even harder to lend to these people by creating even more paperwork for banks to generate that no one ever sees.

If the FDIC is interest in seeing that the banks that it regulates remain healthy and are not overburdened by regulation, you will raise the threshold on streamlined CRA examinations. I will appreciate your help in this matter.

Larry T. Wilson
Chairman, CEO and President

 

Last Updated 10/04/2004 regs@fdic.gov

Last Updated: August 4, 2024