Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official. 
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure. 
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.
Federal Register Publications

FDIC Federal Register Citations



Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations




FDIC Federal Register Citations



From: Herbert Rubin
Sent: Friday, August 20, 2004 11:03 AM
To: Comments
Cc: Crystal Ford
Subject: Rin 3064-AC50

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation

RE: RIN 3064-AC50

Dear Mr. Feldman:

As a concerned citizen and as a scholar who has studied the many advantages
of CRA, 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. I live in an exurban community in which several of the
local banks (whose CRA records are moderate at best) would be exempted under
the proposed rules. Already in my community only newer developments receive
mortgage loans while older neighborhoods deteriorate.

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. In my town we have pressured financial institutions to
offer alternatives to predatory pay day loans. Only the local credit union
has cooperated; banks are already ignoring their local obligations.

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,

Herbert J. Rubin
Professor Emeritus, Northern Illinois University



 

Last Updated 08/22/2004 regs@fdic.gov

Last Updated: August 4, 2024