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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

DUKE LAW COMMUNITY ENTERPRISE CLINIC

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal EES
Federal Deposit Insurance Corporation
550 1711 Street, NW,
Washington DC 20429

RE: RIN 3064-AC50

Dear Mr. Feldman:

I am writing to strongly oppose the FDIC's proposal to change the regulations governing the enforcement of the Community Reinvestment Act of 1977 ("CRA") by redefining the small bank category to include banks with assets up to $1 billion in assets.

The CRA has been a critical tool in getting banks to do a better job of meeting credit needs in low-income and minority communities. Contrary to early industry concerns, this statute and the regulations adopted by the four federal supervisory agencies have not resulted in credit allocation. Instead, they have helped banks to discover and benefit from markets that they did not previously serve. As lender after lender has repeatedly stated: CRA has helped banks do well by doing good.

Nonetheless, effective regulation needs to continue if the progress we are making in rebuilding the economies in low-income and minority communities is to continue. There is ample data to indicate that market failures, such as racial discrimination, continue to permeate the lending industry. Strong and effective regulation is needed to limit the effect of such market failures. Accordingly, if this change is adopted, many of the gains consumers have realized, in terms of access to credit, will be lost.

Banks with assets between $250 million and $1 billion are vital members of the economy in many communities. Additionally, while they may not have the same asset base as the largest lending institutions, such as Citibank, JP Morgan or Bank of America, they are far from small. Not only do they have the capacity to comply with each of the lending, service and investment tests, but they are of such substantial size and economic power, that they should be asked to do so.

The rule proposed by the FDIC would mean that nearly 900 additional FDIC regulated banks would be required to comply only with the streamlined CRA exam. These institutions collectively control nearly $400 billion in assets. Effectively exempting these institutions from full compliance with the CRA will mean fewer loans, less investment and a reduction in services in communities that have been historically discriminated against by financial institutions. Further, other elements of the proposed rule, such as the elimination of small business data reporting and the special treatment given to rural community development activities, regardless of who is targeted, will only exacerbate these problems.

In short, CRA has been an effective tool for both helping banks expand their markets and meeting the credit needs of underserved communities. The current regulations that apply to mid-sized banks are effective, efficient and are not unduly burdensome. Thus, there is no need for the adoption of this rule. More importantly, it is imperative that the current regulatory scheme be continued to assure that the spirit and intent of the CRA is realized. I urge you to halt consideration of the proposed changed to the CRA regulations, as they apply to banks with assets between $250 million and $1 billion.

Thank you for your attention to this matter and please contact me with any questions.

Andrew H. Foster
Duke Law Community Enterprise Clinic
201 W.  Main St., Suite 202D
Durham, NC 27701

Last Updated 10/04/2004 regs@fdic.gov

Last Updated: August 4, 2024