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On Friday, March 11, three of the four banking agencies announced their proposal to revise the Community Reinvestment Act (CRA). This change in the regulation requires a period of public comment period that will close on May 10, 2005.  While the Office of Thrift Supervision (OTS) has proven that they don't care what the public thinks, these three banking agencies, the OCC, the FDIC and the Federal Reserve have shown that they are susceptible to public comments. I have written this previous diary that outlines some of the recent history of bank regulatory shenanigans during the Bush years.

The FDIC backed off from their recent plan to harm CRA, in large part because they received 11,000 comments from the public.  You can help keep the pressure on by commenting on this proposal before May 10. I will summarize the key features, provide a sample letter, and provide email addresses, street addresses, and fax numbers so that you, your family members and friends can comment on this issue.

The regulators do pay attention to the numbers of comments, so please send them something if you care about the rules governing bank lending to low and moderate income people and neighborhoods.

If you want to read the entire proposal you can find the PDF file link at the bottom of this Federal Reserve press release:

To summarize the proposal:

-The proposal eliminates the large bank CRA evaluation lending, investment, and service tests for banks between $250 million and $1 billion in assets.  The proposal provides a simplified lending test and a new community development test for banks in this size range, which they refer to as "intermediate small banks."  

-Currently small banks which are owned by holding companies with assets greater than $1 billion are treated as large banks for CRA purposes, but this proposal eliminates the holding company standard altogether.

 Currently all large banks have to collect data on their small business, farm and community development lending in addition to the home mortgage data. This proposal eliminates the requirement to collect that data for the "intermediate small banks."

In addition, the proposal revises the meaning of the term "community development" as it is applied to rural areas allowing more flexibility for banks to support community development outside of low and moderate income geographies.

The full list of questions that the regulators want the public to respond to are contained on pages 12-15 of the proposal.

You can help with a short letter. Your letter should contain the following points; elaborate as you see fit.

Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551.

E-Mail:  regs.comments@federalreserve.gov

or

FAX:  202/452-3819 or 202/452-3102.

Re: Docket No. R-1225

Dear Ms. Johnson:

We urge you to maintain the service and investment test for banks in the $250 to $1 billion range. The proposed "community development" test will allow banks to do simple easy loans and investments and claim them for CRA purposes. We need the CRA to help get the harder loans and investments done in our community.

We urge you to maintain the current holding company rule. The proposed rule would allow the subsidiary banks of a bank the size and sophistication of Harris Bank of Chicago to no longer be tested for services and investments.

We urge you to maintain the requirement for banks in the $250 to $1 billion range to continued providing small business, small farm and community development loan information.  Much of the small business lending in this country is done by banks this size and it is important to have a complete set of data to understand current lending patterns.

Without opening up the meaning of community development in rural areas, which could lead to unintended consequences, the regulators could simply change the definition of low and moderate income geographies from those that are less than 80% of non-metro median income to those that are less than 80% of the whole state's median income.  This opens up community development lending to more genuinely distressed communities without providing CRA credit for lending activities that should already be in a bank's normal lending portfolio.

Sincerely,

Name
Any identifying information you wish to provide.

You should send the same letter to:

Office of the Comptroller of the Currency
250 E Street, SW.
Mail Stop 1-5
Washington, DC 20219.

E-Mail: regs.comments@occ.treas.gov.  

or

Fax: (202) 874-4448.

Re: Docket # 05-04

Dear OCC:

[Body of letter]

AND TO:

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

E-Mail:  Comments@FDIC.gov

RE: RIN 3064-AC89

Dear Mr. Feldman:

[Body of letter]

For those who want to review a more detailed analysis, one is available on the National Community Reinvestment Coalition's web site.

Let's generate enough comments to make the regulators take notice.

Originally posted to bankbane on Wed Mar 16, 2005 at 05:24 AM PST.

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