BANK
OF KIRKSVILLE
September
17, 2004
Robert E. Feldman, Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
comments@fdic.gov
Dear Mr. Feldman:
As a 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.
My community bank will not long survive if my local community doesn’t
thrive, and that means my bank must be responsive to community needs and promote
and support community and economic development.
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. With 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.
Sincerely,
Brenda Macgruder
Executive Vice President
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