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FDIC Federal Register Citations


Boston Community Capital

From: Jessica Brooks [mailto:jbrooks@bostoncommunitycapital.org]
Sent: Friday, September 17, 2004 1:49 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

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:

On behalf of Boston Community Capital, we are writing to urge you to withdraw your proposed changes to the Community Reinvestment Act (CRA) regulations. If enacted, these proposed changes will significantly harm community development activities across the country.

Boston Community Capital is a community development finance intermediary whose mission is to help build healthy communities where low-income people live and work. Our loans strengthen more than 200 community organizations and provide financing throughout Massachusetts for

• over 4500 units of housing,
• child care facilities and schools that now serve 1300 children,
• non-profit social service providers, and
• 450,000 square feet of commercial space.

In addition, our equity investments support businesses across the Northeast and help to create or preserve more than 1300 jobs in low-income communities or for low-income community residents.

Boston Community Capital has grown from a tiny, start-up, Boston-focused, non-profit capitalized with just $3500 of religious money to a regional organization able to operate at a scale sufficient to have a real and positive impact on the communities we serve. Moreover, although our immediate focus is the Northeast region of the United States, our interests are national. Together with our sister community development finance intermediaries across the country and with National Community Capital Association, our premier trade association, we work to create a national industry – now with more than $10 billion under management – capable of effectively serving low-income communities and capable of helping low-income communities harvest the benefits that can emerge from increased access to commercial capital markets.

Our growth at Boston Community Capital and the growth of our industry would not have been possible without the firm and unwavering support and partnership of many institutions and individuals. Local and national banks have been particularly important partners in our efforts to serve low-income communities effectively. The Community Reinvestment Act has been a vital tool for the promoting investment in low-income communities by banks.

Under the current CRA regulations, banks with assets of at least $250 million are rated by performance evaluations that scrutinize their level of lending, investing, and services to low- and moderate-income communities. The proposed changes will eliminate the investment and service parts of the CRA exam for state-charted banks with assets between $250 million and $1 billion. In place of the investment and service parts of the CRA exam, the FDIC proposes to add a community development criterion. The community development criterion would require mid-size banks with assets between $250 million and $1 billion to engage in only one of three activities: community development lending, investing or services. Currently, mid-size banks must engage in all three activities.

Under the proposed changes, there would be no requirements for banks with up to $1 billion in assets to engage in community development lending and investments-activities that leverage limited public subsidies to provide affordable housing and community and economic development. Without this regulatory impetus, many institutions will significantly reduce their activity in low income communities because, in general, they view such activity as higher risk and/or less profitable than more traditional investing.

The FDIC proposal would significantly harm community development activities across the country, removing 879 state-chartered banks with over $392 billion in assets from scrutiny. This will have harmful consequences for low- and moderate-income communities. Without this examination, mid-size banks will no longer have to make efforts to provide affordable banking services or respond to the needs of these emerging domestic markets.

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. 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. Both the Federal Reserve Board and the Office of the Comptroller of Currency have recognized the harm this proposal would cause.

The proposed regulation is in direct opposition to Congressional intent of the law. In a letter signed by 30 U.S. Senators to the four regulatory agencies regarding an earlier proposal (February 2004) to increase the definition of “small bank” from $250 million to $500 million, the Senators wrote, “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.”

In summary, we believe the FDIC’s proposed changes to CRA regulations undermine the intent of the Community Reinvestment Act, and represent a significant threat to the low-income communities we serve, and to low-income people and communities across the country. We urge you to withdraw this proposal from consideration.

Sincerely,

Elyse Cherry
CEO
President, Boston Community Venture Fund

DeWitt Jones
COO
President, Boston Community Loan Fund

Jessica Brooks
Investor Relations

Boston Community Capital
56 Warren Street
Boston, MA

 


 

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

Last Updated: August 4, 2024