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October 19,2004 Mr. Robert E. Feldman, Executive Secretary Attention: Commenffkgal ESS Federal Deposit Insurance Co~poration 5550 17m St. NW Washington, DC 20429 Re: RIM 3064-AC50
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Dear Mr. Feldman: The Community Economic Development Association of Michigan, a statewide trade associat~on i y over w 250 member and partners, fonai;i opposes your proposed changes to the Community Reinvestm'ent Act that would allow banks wrM assers of up lo $1 billiu~~be given the same truncated test as small L o banks. Small banks, institutions with less than $250 million in assets, are evaluated under a "streamlined" lending test with no test regarding investrnt=ntor services. They are examined only once every four or five years, depending on whetherthey have a satisfactory or an outstanding rating, respectively. Currently, banks with assets greater man $250 mllllon are subjmted to the most rigorous cwrns. Under current CRA regulations, banks having at least $250 million in assets are rated according to performance regarding lending, invating, and services to low- and mnderateincome communities. In Michigan, 36 of these FDIC insured institutions with assets totaling $15,263,665,000, would no longer be subjected to the most rigorous exams. Currently, banks are required to finance affordable housing and economic development projects that
target low- and rnodcmte-income borrowers and neighbnhrmds. Under the proposed changes, banks
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may earn CRA points for financing developments that have no community economic development benefit. Nationally, since 1977, banks and community organizations have entered into over 390 community agreerrla~~ls more than 51.09 trillion in rcinvectment dollars for underserved popt~latinns.A worth department of treasury study documents that lenders made more loans to low-and moderate-income borrowers in geographical areas in which they had negotiated CRA agreements with local community groups. Without guidelines that encourage banks to provide loans, services and investment in low-and moderate income neighborhoods, banks could default ta the days of "redlining," in which particular neighborhoods received no services, loans or investment Again, CEDAM urges you to keep the current CRA exam threshold. It will matter in Michigan.
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