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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations



Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ISS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429-9990.
Re: RIN 3064-AC50

Re: RIN 3064-AC50

Gentlemen:

I strongly oppose the FDIC’s proposed changes to its Community Reinvestment Act regulations.

As one of the Federal Home Loan Bank System’s original twelve community investment officers in the late 1970s, I saw first-hand the early benefits of a vigorously enforced CRA in both urban and rural communities. Later, with the advent of the Bank System’s Affordable Housing Program, CRA continued to be a vital tool for community development. Carefully crafted amendments in 1995 updated the regulatory structure of CRA without compromising its effectiveness.

Without diminishing the negative impact of the FDIC’s proposal in urban America, I am especially concerned about the disastrous consequences its adoption would have in rural America. My observations about the importance of CRA in rural America come both from my own professional experience in the Southeast for nearly 25 years as the Federal Home Loan Bank of Atlanta’s community investment officer, and from my exposure to the work of a wide variety of rural CDCs from all parts of the country as a member of the Local Initiatives Support Corporation’s Rural Advisory Committee, both before and after my retirement from the Bank System.

Though urban areas have been perceived as CRA’s primary beneficiaries, CRA’s impact has been especially pronounced in rural America, where larger banking institutions have little or no presence. In smaller towns and rural areas, affordable housing and community developers must rely on locally based, modestly sized community banks, and these institutions have been significantly motivated under current CRA regulations to seek out and take advantage of lending, investment, and service opportunities that benefit low- and moderate-income households and areas within their communities.

The FDIC’s current proposal will virtually eliminate CRA as an effective incentive in rural America. While the proposal attempts to address the clearly negative impact it will have on rural areas by including the catch-all phrase “or . . . in rural areas” in each of the
elements of its definition of “community development,” the attempted solution is fatally over-broad, which the proposal then compounds by allowing “small” banks to meet the community development criterion with only one of the three elements (services, for example). More importantly, the proposal completely eliminates low- and moderate-income households or areas from the equation in the evaluation of newly designated small banks “in rural areas,” despite the clear mandate of the statute that such households and areas be included. The combination of the two (i.e., credit for any community development activity in a rural area, even if it’s only a “service,” and no incentive to include low- and moderate-income households or areas) will seriously jeopardize current partnerships between rural community developers and local banks, and dramatically diminish the chances for future affordable housing and community development partnerships in rural areas.

In the course of its almost 27-year history, CRA has proven remarkably successful, without ever mandating a single loan, investment, or service. It has been especially effective in rural America, where several thousand rural community developers have relied on it to help them attract the participation of their local financial institutions. Please do not jeopardize the futures of these community developers and the rural communities they serve. I respectfully ask that you withdraw this proposal.

Sincerely,

Robert S. Warwick

 

Last Updated 09/28/2004 regs@fdic.gov

Last Updated: August 4, 2024