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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

September 19, 2004

Robert E. Feldman Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW.
Washington, DC 20429

Attention: Comments/Legal ESS

FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 345
RIN 3064-AC50
Community Reinvestment Act
ACTION: Notice of proposed rulemaking

In the February 2004 NPR, the agencies stated that the CRA regulations were essentially sound, but were in need of some updating to keep pace with changes in the financial services industry. Notably, to reflect economic change in the industry and reduce unwarranted burden consistent with ongoing efforts to identify and reduce regulatory burden where appropriate and feasible, the agencies proposed to amend the definition of "small bank" to mean an institution with total assets of less than $500 million, without regard to any holding company affiliation. This change would take into account substantial institutional asset growth and consolidation in the banking and thrift industries since the $250 million definition was adopted in 1995. In light of certain responses found in the comment letters responding to the February 2004 NPR, the FDIC has decided to publish for comment this NPR with respect to how "small banks" are defined and evaluated and other matters. The FDIC, in keeping with its commitment to review its regulations implementing the CRA, seeks comments on whether. this proposal presented here would: enhance the effectiveness of the CRA regulations and CRA evaluations by addressing concerns about community development needs, including those of rural communities; and reduce regulatory burden by updating the regulation in light of changes in the banking industry over the past ten years.

The concept of reducing the burden associated with Community Reinvestment Act reporting on financial institutions is challenging for anyone who has experienced discrimination, and/or found it difficult to obtain banking services in a rural community. The only clear outcomes that will result from the proposed changes to 12 CFR Part 345 is less services in underserved markets and continuing consolidation in the in banking industry. Before any new regulations are enacted that reduce the reporting requirements on financial institutions more research must be done to identify ways to increase the homeownership rate among minority and low income families in rural America. Depository institutions must be held accountable to the communities they serve. Beside mortgage financing, small community banks should increase access to affordable consumer and small business loans.

Changes in the banking industry were cited as a reason for updating policy. When is the deterioration of the employment outlook in rural America going to become a component in the policy making process? Entrepreneurship is supposed to help create new jobs which will carry the country to economic recovery. If the financial institutions do not have to substantiate their role in the equation, who is going to monitor their social investment for the greater good of the country?

Consolidation in the financial services area is erodi:. the ability of lower income families to access the capital markets because banking personnel are being replaced by automated tellers and online banking services at a time when many Americans_ especially Native Americans, still operate on a cash basis. Change is a wonderful word to describe the contraction that has been occurring in the banking industry. We need look no further than the Oil industry to see the long term implication of acquisitions based on the low entry cost versus developing sustainable relationship through traditional methods.

America does not need less regulation of community banks. What low-moderate income families need is greater access to capital. Financial literacy training is an invaluable tool, but a well educated consumer has little hope if the local bank does not have a vested interest in their success.

Sincerely,
THOMAS C. WRIGHT
P.O. Box 385
1565 Pte Brulee Road
Hessel, Michigan 49745

Last Updated 10/20/2004 regs@fdic.gov

Last Updated: August 4, 2024