Rural Community Assistance Corporation
From: Blake Chambliss
Sent: Friday, September 10, 2004 11:04 AM
To: Comments
Subject: Withdraw Proposal to Weaken CRA
Blake Chambliss
3300 E. Virginia
Denver, CO 80209
September 10, 2004
Federal Deposit E Insurance Corp
Robert Feldman, Executive Secretary
550 17th Street NW
Washington, DC 20429
Dear Federal Deposit Insurance Corp:
Mr. Robert E. Feldman
Executive Secretary
ATTN: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 E. 17th Street, NW
Washington, DC 20429
RE: RIN 3064-AC50
Dear Mr. Feldman:
As a member of the National Community Capital Association (NCCA)
and on
behalf of Rural Community Assistance Corporation (RCAC), I urge you
to
withdraw your proposed changes to the Community Reinvestment Act
(CRA)
regulations. If enacted, the FDIC will define small banks as $1 billion
and less with those banks having assets between $250 million and
$1
billion subject to community development criteria.
Under current regulations, banks with assets of at least $250 million
have
performance evaluations that review lending, investing, and services
to
low- and moderate-income communities. You propose that state-chartered
banks with assets between $250 million and $1 billion follow a community
development criterion that will result in significantly fewer loans
and
investments in low-income rural communities -- communities that the
CRA
was enacted to serve.
RCAC is a nonprofit organization serving rural communities in 13
states
throughout the west. RCAC provides technical assistance to rural
communities needing help with housing and infrastructure development,
particularly for low and moderate income families. The Rural communities
RCAC works in are served by smaller banks which would be exempted
from
responsibility to serve them. In fact two of the states we assist
--
Wyoming and Alaska -- would have no responsive banks, and two others
--
Montana and Idaho --would be served by only one bank each, with no
competetion to encourage greater responsiveness.
The proposed regulation is in direct opposition to Congressional
intent of
the law. In a letter signed by 30 U.S. Senators, states, “This
proposal
dramatically weakens the effectiveness of CRA…We are concerned
that the
proposed regulation would eliminate the responsibility of many banks
to
invest in the communities they serve through programs such as the
Low
Income Housing Tax Credit or provide critically needed services such
as
low-cost bank accounts for low- and moderate-income consumers.”
This proposal would remove 879 state-chartered banks with over $392
billion in assets from scrutiny. Without this examination, mid-size
banks
serving rural communities will no longer have to make efforts to
provide
affordable banking services or respond to the needs of these emerging
domestic markets.
Since 95.7 percent of the banks you regulate have less than $1
billion in
assets, there will be no accountability for the vast majority of
state-chartered banks.
Your proposal is especially harmful to the rural populations RCAC
serves.
The proposal seeks to have community development activities in rural
areas
counted for any group of individuals regardless of income. This could
divert services from low- and moderate-income communities in rural
areas
where the needs are particularly great. Wyoming and Idaho would have
NO
banks with a CRA impetus to both invest in and provide services to
their
communities. Alaska and Montana would only have one bank each. We
think
this would be very hard to justify to the low-income rural communities
left without meaningful competetion in services.
Instead of weakening the CRA, the FDIC should be doing more to protect
our
communities. CRA covers only banks and does not differentiate between
stand-alone banks and banks that are part of large holding companies.
All
financial services companies that receive direct or indirect taxpayer
support or subsidy should have to comply with the CRA. Small banks
that
are part of large holding companies should have to conform to the
CRA’s
standards that are more stringent.
The regulators also must protect consumers from abusive lending.
The
FDIC’s proposal completely ignores this issue. Predatory lending
strips
billions in wealth from low-income consumers and rural communities
in the
U.S. each year. Borrowers lose an estimated $9.1 billion annually
due to
predatory mortgages; $3.4 billion from payday loans; and $3.5 billion
in
other lending abuses, such as overdraft loans, excessive credit card
debt,
and tax refund loans. Without a comprehensive standard, the CRA becomes
nearly meaningless. The regulation should contain a comprehensive,
enforceable provision to consider abusive practices, and assess CRA
compliance accordingly, and it must apply to ALL loans.
The impetus for the creation of the CRA was to encourage federally
insured
financial institutions to meet the credit and banking needs of the
communities they serve, especially low- and moderate-income communities.
This proposal undermines the intent of CRA, and threatens to undo
the
years of effort to bring unbanked consumers into the financial mainstream.
I urge you to remove this dangerous proposal from consideration.
Sincerely,
Blake Chambliss
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