PLATINUM BANK
September 18, 2004
Mr. Robert E. Feldman
Executive Secretary
Attn: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington D.C. 20249
Dear Mr. Feldman
As a 30-year community banker, I join my fellow community bankers
throughout the nation in strong support of the FDIC's proposal to
increase the asset size limit of banks eligible for the streamlined
small-bank CRA examination. I also strongly support the elimination
of the separate holding company qualification.
The proposal will greatly alleviate unnecessary paperwork and examination
burden without weakening our commitment to reinvest in our communities.
Reinvesting in our communities is something we do everyday as a matter
of good business. Community banks recognize that capital investment
in our local markets is our major goal to ensure a thriving business
and standard of living environment. This means my bank must be responsive
to community needs and promote and support community and economic
development. Our bank invests the majority of its funds in the local
community.
Making it less burdensome to undergo a CRA exam by expanding eligibility
for the streamlined exam will not change the way my bank does business.
In fact, it will free up human and financial resources that can be
redirected to the community and used to make loans and provide other
services.
It is important to remember that the streamlined CRA exam is not
an exemption from CRA. It is a more cost effective and efficient
CRA exam. Banks subject to the simplified CRA exam are still fully
obligated to comply with CRA. Just as now, community banks would
continue to be examined to ensure they lend to all segments of their
communities, including low- and moderate-income individuals and neighborhoods.
It just doesn't make sense and is inequitable to evaluate a $500
million or $1 billion bank using the same exam procedures as for
$100 billion or $500 billion bank.
One of the problems with
the current large bank CRA exam is that the definition of "qualified investments" is
too limited, and qualified investments can be difficult to find.
As a result,
many community banks (especially those in rural areas) have to invest
in regional or statewide mortgage bonds or housing bonds and the
like to meet CRA requirements. These investments may benefit other
areas of the state or region, but they actually take resources away
from the bank's local community. Community banks and communities
would be better off if the banks could truly reinvest those dollars
locally to support their own local economies and residents.
For this reason, I find that the FDIC's proposed community development
requirement for banks between $250 million and $1 billion is more
flexible and more appropriate than the large bank investment test.
The advantage to this proposal is that it continues to focus on community
development, but considers investments, lending and services. It
would let community banks pursue community development activities
that both meet the local community's needs and make sense in light
of the bank's strategic strengths.
Similarly, the proposal
will help rural banks meet the special needs of their communities
by expanding the definition of "community
development" so that it includes activities that benefit rural
residents in addition to low- and moderate-income individuals. Rural
banks are frequently
called upon to support needed economic or infrastructure development
such as school construction, revitalizing Main Street, or loans
that help create needed or better-paying jobs. These activities
should not be ineligible for CRA credit because they do not benefit
only low- or moderate-income individuals.
The FDIC's proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more and more community
banks like mine will find they cannot sustain independent existence
because of the crushing regulatory burden, and will opt to sell out.
For many small towns and rural communities, the loss of the local
bank is a major blow to the local community. By easing regulatory
burden, it will make it easier for community banks like mine to continue
to provide committed service to local communities that few other
financial service providers are willing to do.
Thank you for considering my views.
Jerry M. Kyle
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