WASHINGTON COUNTY BANK
September 10, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: Community Reinvestment, RIN number 3064-AC50;
Proposal to Expand
Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman:
As a rural community banker who started large bank CRA reporting
January 1 of this year, I urge your support for the streamlined small-bank
CRA examination and the elimination of the separate holding company
qualification. As a small bank of $40 million , we found the cost
of training, data capture, and labor demands to be one of the largest
non-interest budget items for the year!
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,
our bank had to invest in regional housing bonds to meet CRA requirements.
These investments may benefit other areas of the region,
but they actually took resources away from the Tekamah
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. Communities like Tekamah, Herman, Craig, and
Decatur, Nebraska deserve viable infrastructure, quality education,
adequate
fire and police protection, and locally funded housing and economic
development. Expanding the definition of "community development" to
include these activities for rural citizens in addition to low and
moderate income individuals only makes good sense.
The FDIC's
proposed changes to CRA are needed to help alleviate regulatory
burden. Without 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
as happened in Tekamah. What used to be a century old local bank
with local directors and lifelong ties to the community is now a
branch bank. By easing regulatory burden, it will make it easier
for other community banks 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,
Larry N. Nelson, President
Washington
County Bank
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