September 8, 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:
As a concerned citizen, I urge you to withdraw your proposed changes
to the Community Reinvestment Act (CRA) regulations. CRA has been
instrumental in increasing homeownership and economic development.
Your proposed changes are contrary to the CRA because they will slow
down the progress made in community reinvestment.
I understand that CRA exams look at the number of loans, investments,
and services that banks with more than $250 million in assets make
to low- and moderate-income communities. Your proposal will eliminate
the investment and service parts of the CRA exam for banks with assets
between $250 million and $1 billion.
To replace the investment and service parts of the CRA exam, the
FDIC proposes to add an inadequate community development criterion.
Mid-size banks with assets between $250 million and $1 billion would
only have to engage in one of three activities: community development
lending, investing or services. Currently, mid-size banks must engage
in all three activities. I believe that the end result will be significantly
fewer loans and investments in affordable rental housing, health
clinics, community centers, and economic development projects.
The elimination of the service test will also have harmful consequences
for low- and moderate-income communities. CRA examiners will no longer
expect mid-size banks to place bank branches in low- and moderate-income
communities. Mid-size banks will no longer make efforts to provide
affordable checking and savings accounts to consumers with modest
incomes. In addition, your proposal eliminates small business lending
data reporting for mid-size banks. Without data on lending to small
businesses, the public cannot hold mid-size banks accountable for
responding to the credit needs of small businesses.
You propose that community development activities in rural areas
can benefit any group of individuals instead of only low- and moderate-income
individuals. Since a large number of rural residents are rich, your
proposal threatens to divert community development activities away
from the low- and moderate-income communities and consumers that
is the focus of CRA.
In conclusion,
your proposal is directly the opposite of CRA’s
mandate of imposing an obligation to meet community needs. Two other
federal agencies did not embark upon the path you are taking because
they recognized the harm it would cause. CRA is too vital to be gutted
by regulators. If you do not reverse your proposed course of action,
I will ask that Congress halt your efforts before the damage is done.
Sincerely,
ROYCE HARRIS
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