FDIC Federal Register Citations

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

RE: RIN 3064-AC50

Dear Mr. Feldman:

I am a concerned citizen opposed to watering down CRA (Community Reinvestment Act) requirements for mid-sized banks. CRA is vital for increasing homeownership and economic development in lower-income communities. Your proposed changes will halt the progress that has been made.

I understand that banks with over $250 million in assets must be tested on their number of loans, investments, and services to low- and moderate-income communities. But your proposal would eliminate the investment and service requirements for all banks with under $1 billion in assets. This will result in significantly fewer loans and investments in affordable rental housing, health clinics, community centers, and economic development projects.

Native Americans living on reservations are the most unbanked population in the United States. The Navajo Nation, for example, has 5 bank branches in total for a population of a quarter of a million people living in an area the size of West Virginia. You can see the same or greater number of branches in a single block in our Nation’s Capital. The proposed changes would only serve to worsen banking services to tribes.

The proposed changes, which would make smaller banks less accountable for their community reinvestment activity, alarm us, as banks are finally waking up to the investment opportunities in Indian country. Indian country has made strides with the help of banks in the mortgage arena—we saw conventional mortgage activity increase for Native Americans in 2003. We believe that the strength of the current law has been instrumental to this development.

The following data point up the severe continuing needs in Indian country, that require a strong CRA. According to the GAO, the rate of homeownership for Native Americans living on reservations is just 33 percent, or half that of the general population and substantially lower than that of other minority groups. In addition, Native Americans are four times more likely than the average American family to live in substandard housing. (Fannie Mae data, Testimony, Pattye Greene, May 3, 2004, House Financial Services Committee) Overcrowding has been documented in the NAIHC study “Too Few Rooms...” (2001) reporting as many as 25 or even 30 people living in deplorable conditions under one roof in a 2- or 3-bedroom house.

If the watered-down exam was approved, it would allow mid-sized banks to choose which community development activities they will undertake. Right now, these banks must make community development loans, investments, and services. Your proposed test allows banks to choose only one of the three activities. The result will be less community development activity. The recent strides in economic development in Indian country will be lost if banks aren’t required to invest.

You also propose that community development activities in rural areas should benefit any group of individuals instead of only low- and moderate-income individuals. But this will allow banks to cherry-pick and focus on affluent residents of rural areas rather than the lower income consumers CRA targets. Finally, you would also eliminate publicly available data on the small business lending of mid-sized banks. Without data, community groups and citizens cannot hold banks accountable for lending to small businesses in their communities.

Your proposed changes directly oppose CRA’s mandate to require lenders to meet community needs. CRA is too important to be gutted. Please withdraw your proposal, as did two other federal agencies—the Office of Thrifts Supervision and the Federal Reserve—that recognized the harm of similar changes to underserved communities.

Sincerely,
Iris N. Nesbit
1845 Jug Road
Dover, PA 17315

Cc: National American Indian Housing Council (fax: 202-789-1754)
National Community Reinvestment Coalition (fax: 202-628-9800)
President George W. Bush (White House fax: 202-456-2461)
Senators John Kerry (fax: 202-224-8525)
Senator John Edwards (fax: 202-228-1374)