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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

CITY OF CHICAGO DEPARTMENT OF HOUSING

September 15, 2004

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

RE: RIN3064-AC50

Dear Mr. Feldman:

On behalf of the City of Chicago, I am writing to urge you to withdraw the proposed changes to the FDIC's regulation of the Community Reinvestment Act (CRA). CRA has been instrumental in increasing access to homeownership and boosting economic development in Chicago. We are concerned that FDIC's proposed changes may halt progress in our efforts to develop and revitalize Chicago's communities.

FDIC's proposal would, for banks it regulates, change the definition of institutions considered "small" for CRA purposes from any institution with less than $250 million in assets and not part of a holding company with over $1 billion in assets to include all institutions with less than $1 billion in assets regardless of holding company size.

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. If approved, over 97 percent of all banks in Illinois would be subject to a watered-down CRA exam. The proposed change would affect 70 banks in Illinois.

In place of the investment and service parts of the CRA exam, the FDIC proposes to add a community development criterion under which mid-size banks would have to engage in only one of three activities: community development loans, investments, or services. In addition, the FDIC proposes to allow banks to receive CRA credit for activities in areas that are not targeted to the low and moderate income populations that CRA was intended to help.

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, and economic development projects. It will be too easy for a mid-size bank to demonstrate compliance with a community development criterion by spreading a few grants or sponsoring a few homeownership fairs rather than engaging in a comprehensive effort to provide community development loans, investments, and services.

We do not believe that the regulatory burden for mid-sized financial institutions is sufficient to justify the potential loss of essential development resources for low and moderate income communities nationwide. Furthermore, applying the streamlined small bank exam to mid-sized institutions threatens CRA's statutory purpose of the safe and sound provision of credit and deposit services.

We thank you for considering our comments, and we urge the FDIC to withdraw the proposed changes to its CRA regulation.

Sincerely,
John G. Markowski, Commissioner
Department of Housing

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

Last Updated: August 4, 2024