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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

SAN DIEGO HOUSING FEDERATION

September 2, 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:

The San Diego Housing Federation urges you to withdraw your proposed changes to the Community Reinvestment Act (CRA) regulations. CRA has been instrumental in increasing homeownership, boosting economic development, and expanding small businesses in the nation’s immigrant, low- and moderate-income, and people of color communities.

Under the current CRA regulations, banks with assets of at least $250 million are rated by performance evaluations that scrutinize their level of lending, investing, and services to low- and moderate-income communities. 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. In place of the investment and service parts of the CRA exam, the FDIC proposes to add a community development criterion. The
community development criterion would require mid-size banks with assets between $250 million and $1 billion to engage in only one of three activities: community development lending, investing or services. Currently, mid-size banks must engage in all three activities.

If enacted, 879 state-chartered banks with over $392 billion in assets would become eligible for the streamlined and cursory exam. In total, 95.7 percent or more than 5,000 of the state-charted banks that the FDIC regulates have less than $1 billion in assets. These 5,000 banks have combined assets of more than $754 billion. In California, there are 146 state-chartered banks located within urban areas. 122 of these or 84% have assets up to $1 billion and would be eligible for the streamlined exam. In rural California, there are 9 state chartered financial institutions with 8 of these having assets up to $1 billion. If enacted, 89% of California's rural financial institutions would become eligible for the streamlined exam. The FDIC proposal would significantly harm community development activities in rural areas. The proposal states that a bank's rural community development activities could benefit any group of individuals instead of only low- and moderate-income individuals.

The FDIC's proposal would eliminate the small business lending data reporting requirement for mid-size banks. Mid-size banks with assets between $250 million and $1 billion will no longer be required to report small business lending by census tracts or revenue size of the small business borrowers.

In sum, the FDIC’s proposal is directly opposite CRA’s statutory mandate of imposing a continuing and affirmative obligation to meet community needs. The proposed changes will dramatically reduce community development lending, investing, and services. The proposal will particularly affect rural areas least able to afford reductions in credit and capital. Eliminating critical data on small business lending will also result in further reductions to the amount and type of small business lending. The Federal Reserve Board and the Office of the Comptroller of the Currency have recognized the harm this
proposal would cause.

The San Diego Housing Federation is a coalition of affordable housing developers, lenders, local governments and social services agencies pursuing the development of affordable housing in San Diego County. We sit on the San Diego Reinvestment Task Force performance review subcommittee where we review the annual CRA performance of the banks operating here. This gives us a chance to see how the banks are meeting their CRA goals, but it also connects the banks those that are doing community development. In addition to the impacts of this change outlined above, it would in great part eliminate the effectiveness of those reviews because the banks will not have the data to report. Please withdraw this planned action.

Sincerely,

Tom Scott
Executive Director
San Diego Housing Federation
450 B Street, Suite 1010
San Diego, CA 92101

Last Updated 09/03/2004 regs@fdic.gov

Last Updated: August 4, 2024