Jane
Addams Hull House Association
From: Terri
Johnson [mailto:tjohnson@hullhouse.org]
Sent: Friday, September 17, 2004 4:59 PM
To: Comments
Cc: cwood@hullhouse.org; mcausey-drake@hullhouse.org
Subject: Community Reinvestment Act
I am writing on behalf of Jane Addams Hull House Association to
oppose the Federal Deposit Insurance Corporation (FDIC) proposed
changes to the Community Reinvestment Act (CRA). If the FDIC adopts
these changes, community development activity in low- and moderate-income
neighborhoods and rural areas throughout the Chicago region and the
nation will be threatened.
The FDICs decision is harmful for a number of reasons. First, the
FDIC is the primary regulator of many state chartered banks that
frequently fall between $250 million and $1 billion in assets. For
institutions active in Illinois in 2003, nearly 40 percent of assets
controlled by FDIC-regulated institutions were held by banks with
assets between $250 million and $1 billion. Additionally, the proposed
changes would dramatically affect the presence of FDIC-regulated
institutions in IllinoisLMI and rural communities. An analysis of
2003 banking offices in Illinois urban areas indicates that increasing
the asset size of small banks to $1 billion would decrease the number
of FDIC-regulated banking offices in Illinois LMI census tracts operated
by largebanks by 63 percent. Deposits in LMI branches held by largeFDIC-regulated
banks would decline by 68 percent. FDIC-regulated branches controlling
nearly $3.4 billion in LMI deposits, or over 10 percent of all LMI
deposits state-wide, would shift from largeto smallinstitution status
if the asset size of small banks were to increase to $1 billion.
Rural areas will be hard hit as well. Just over 1 percent of rural
Illinois banking offices operated by FDIC-regulated institutions
would be held by largebanks, a decline of 91.5 percent. This shift
would represent nearly 8 percent of rural deposits state-wide.
The proposed changes would reduce the number of financial institutions
considered largefor CRA purposes. Our organization fears this will
threaten access to investments, grants, and services for low- and
moderate-income (LMI) communities served by large institutions that
would shift to smallstatus under the regulatorsproposal. There is
a significant concern that areas predominantly served by mid-sized
institutions will be particularly hard hit.
We oppose these changes to the Community Reinvestment Act and ask
that FDIC drop this proposal.
Sincerely
Terri A. Johnson
Vice President, Public Policy & Advocacy
Jane Addams Hull House Association
Human Relations Foundation/Jane Addams Policy Initiative
10 S. Riverside Plaza, Suite 1700
Chicago, IL
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