Neighborhood Recovery Community Development
Corporation
September 20, 2004
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal
ESS
Federal Deposit Insurance Corporation
550 17th St. NW 20429
RE: RIN 3064-AC50
Dear Mr. Feldman
On behalf of
Neighborhood Recovery Community Development Corporation (NRCDC),
I am writing
to you to express opposition to the Federal
Deposit Insurance Corporation's proposal which would weaken the Community
Reinvestment Act and raise the asset threshold for "small banks."
The proposed
rules to revise the definition of a "small bank" raising
the asset threshold to $1 billion will negatively impact community
development investments in low- and moderate-income areas. Any increase
to the threshold of what is considered to be a small bank would relieve
many of our community's partners from the requirements currently
in place. Financial institutions will feel less pressure to explain
how they have served their local communities. Thus they will not
be held accountable for responding to the credit needs of small businesses,
especially minority-owned businesses. As a result, I believe that
there will be significantly fewer loans to and investments in affordable
housing, health clinics, community centers, and economic development
projects while these banks continue to accept the deposits of the
residents of these communities.
The Community Reinvestment Act was intended to encourage depository
institutions to help meet the credit needs of the communities in
which they operate. Presently, those banks subject to the CRA must
demonstrate that they provide both services and investments that
benefit low and moderate income households and neighborhoods in their
communities.
The proposed changes would greatly diminish banks' obligation to
reinvest in their communities. This proposal is directly the opposite
of CRA's mandate of imposing a responsibility for banks to actively
participate in meeting the needs of the people. The participation
of financial institutions to meet these needs is critical to changing
the many years of redlining and discrimination that has bankrupted
our inner cities and many rural areas. There is more than ample evidence
to prove that widespread discrimination by institutions still takes
place even today.
Many working class and working poor communities have benefited from
the Community Reinvestment Act. Close partnerships have been developed
with banks on a variety of community and economic development projects
and investments that produced positive results for the City of Houston.
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. We must have
the continued partnering of the banking community leveraged
by the government programs to provide safe and decent housing for
the low- and moderate-income communities. In order to ensure the
continued growth and sustainability of community development and
its ability to provide services to traditionally underserved and
unserved markets throughout this state, as well as this country,
it is essential for the FDIC to withdraw its proposal to change the
Community Reinvestment Act and maintain the small bank definition
at $250 million.
Sincerely,
Paul D. Charles Executive Director
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