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FDIC Federal Register Citations

INNER CITY PRESS/COMMUNITY ON THE MOVE

From: Matthew Lee 
Sent: Sunday, September 19, 2004 7:40 PM
To: Comments
Subject: Re: RIN 3064-AC50, ICP's Timely opposition to FDIC's (anti-) CRA proposal

September 19, 2004

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

RE: RIN 3064-AC50

Dear Mr. Feldman, Chairman Powell, and others at the FDIC:

On behalf of Inner City Press / Community on the Move and its members and affiliates including the Fair Finance Watch (collectively, "ICP"), this is a timely comment opposing the FDIC's proposed changes to the Community Reinvestment Act ("CRA") regulations. ICP specifically opposes raising the threshold for meaningful CRA exams up to $1 billion. This would, contrary to the statute and to the agencies' precedents, let many important insured depository institutions off the hook, and would harm communities and their development and residents.

While ICP is active nationwide, we have recent reviewed which FDIC-supervised institutions in New York State, with assets from $1 billion down to $500 million and $250 million, would be let off the hook under your proposal. There are appear to be more than ten such institutions, ranging from Bank of Utica and Berkshire Bank, each with nearly $1 billion in assets, through Mitsubishi Trust & Banking and Interaudi Bank, Woori American Bank and Bank of India, and Chinese American Bank and Habib American Bank, and Rhinebeck Savings Bank. ICP has had occasion to comment to the FDIC on weaknesses in the CRA record of Bank of Berkshire; those comments are incorporated herein by reference. Please also be aware for the record that the New York Banking Department has in recent years given rare "Needs to Improve" CRA ratings to Bank of India Chinese American Bank and others. Even in cases where, following an adverse rating, a bank has sought to raise its rating, these are improvements that would not take place under your proposal. It cannot be said that the banks affected are uniformly serving the credit needs of communities; the benefit to them of letting them off the hook does not outweigh the harm you propose to create to already underserved communities -- including, in New York, communities still feeling the negative effects, including on access to credit, of the 9/11 attacks. Your proposal, in short, is irresponsible, and should be withdrawn.

Nationwide, as calculated by NCRC, of which ICP is a member and on whose board of directors I serve, the FDIC's proposal would make 879 state-chartered banks with over $392 billion in assets eligible for the streamlined and cursory exam. In total, 95.7 percent or more than 5,000 of the state-charted banks your agency regulates have less than $1 billion in assets. These 5,000 banks have combined assets of more than $754 billion. The combined assets of these banks rival that of the largest banks in the United States, including Bank of America and JP Morgan Chase. Your proposal will drastically reduce, by hundreds of billions of dollars, the bank assets available for community development lending, investing, and services.

The elimination of the service test will also have harmful consequences for low- and moderate-income communities. CRA examiners will no longer expect mid-size banks to maintain and/or build bank branches in low- and moderate-income communities. Mid-size banks will no longer make sustained efforts to provide affordable banking services, and checking and savings accounts to consumers with modest incomes. Mid-size banks will also not respond to the needs for the growing demand for services needed by immigrants such as low cost remittances overseas.

Banks eligible for the FDIC proposal with assets between $250 million and $1 billion have 7,860 branches. All banks regulated by the FDIC with assets under $1 billion have 18,811 branches. Your proposal leaves banks with thousands of branches "off the hook" for placing any branches in low- and moderate-income communities.

Another destructive element in your proposal is the elimination of the small business lending data reporting requirement for mid-size banks. Mid-size banks with assets between $250 million and $1 billion will no longer be required to report small business lending by census tracts or revenue size of the small business borrowers. Without data on lending to small businesses, it is impossible for the public at large to hold the mid-size banks accountable for responding to the credit needs of minority-owned, women-owned, and other small businesses. Data disclosure has been responsible for increasing access to credit precisely because disclosure holds banks accountable. Your proposal will decrease access to credit for small businesses, which is directly contrary to CRA's goals.

Lastly, to make matters worse, you propose that community development activities in rural areas can benefit any group of individuals instead of only low- and moderate-income individuals. Since a significant number of rural residents are affluent, your proposal threatens to divert community development activities away from the low- and moderate-income communities and consumers that CRA targets. Your proposal for rural America merely exacerbates the harm of your proposed streamlined exam for mid-size banks. Your streamlined exam will result in much less community development activity. In rural America, that reduced amount of community development activity can now earn CRA points if it benefits affluent consumers and communities. What's left over for low- and moderate-income rural residents are the crumbs of a shrinking CRA pie of community development activity.

In sum, your proposal is directly the opposite of CRA's statutory mandate of imposing a continuing and affirmative obligation to meet community needs. Your proposal will dramatically reduce community development lending, investing, and services. You compound the damage of your proposal in rural areas, which are least able to afford reductions in credit and capital. You also eliminate critical data on small business lending. Note -- after preparing this comment for submission by your September 20, 2004 deadline, ICP learned that you have extended the comment period through October 20, 2004. ICP may submit further comments.

CRA is too vital to be gutted by regulatory fiat and neglect. Stop, we say: stop!

Sincerely,

Matthew Lee, Esq.
Executive Director

Last Updated 10/01/2004 regs@fdic.gov

Last Updated: August 4, 2024