WASHINGTON, D.C. - In a major bid to generate additional public feedback in the final week before a comment period closes, the SaveCRA Web site (www.SaveCRA.org) is urging concerned Americans to send an email by no later than May 10, 2005 to the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) to oppose pending rules by the three agencies that would weaken existing Community Reinvestment Act (CRA) requirements for more than 1,500 banks.

A project of the National Community Capital Association (NCCA), the www.SaveCRA.org Web site was launched on October 14, 2004 to oppose pending FDIC rules to water down CRA rules and generated more than 500 emails by that earlier deadline. Under the current proposals from the three federal banking regulators, financial institutions with assets between $250 million and $1 billion no longer would be able to choose to conduct either services or investment, or neither, in low- and moderate-income communities.

NCCA President and CEO Mark Pinsky said: "Hardest hit by this ill-considered proposal will be struggling parts of the nation where CRA funds are critical to affordable housing, vitally needed community services, economic development, loans for small businesses (particularly those that are minority owned) and nonprofits, which are already starved for capital. For poor and struggling urban and rural areas across America, the rule is a real problem. We want to make sure that all people understand what is at stake and that they have a chance to speak up about it."

The full text of the suggested email message to the Federal Reserve, FDIC and OCC reads as follows:

"To whom it may concern:

Thank you for the opportunity to comment on proposed changes to the Community Reinvestment Act (CRA). This proposal is an improvement over the proposal issued in early 2004, but contains serious flaws that allow the CRA to fall short of its full potential to channel loans, investments, and services to low and moderate-income people and to underserved communities.

The proposal would create a new category of "intermediate small banks" having between $250 million and $1 billion in assets, and would subject those banks to a two-part CRA examination including a lending test and a new "community development" test. I urge you to discard this proposal and maintain the current three-part test. Lending, investment, and services are all critical components of a bank's CRA strategy, and a maximum number of banks should be subject to those obligations.

Partnerships with and investments in community development financial institutions (CDFIs) are an important way that many banks meet their commitment to serve their markets. Replacing the Investment Test with a Community Development Test that does not explicitly encourage investment and services could stifle these partnerships, which have created new customers and new markets for banks.

In addition to maintaining the three-part test, the regulators should keep the portion of an earlier proposal that required public disclosure of lending data on small business and farm lending. The Home Mortgage Disclosure Act (HMDA) has resulted in new understanding of home mortgage markets and helped millions of low-income and minority borrowers become homeowners. Requiring similar data on small business lending would help close gaps in availability of business credit.

The purpose of the CRA is to extend credit and capital to low-income people and communities. For this reason, the agencies must target CRA lending and benefits to low and moderate-income people in rural areas, rather than assigning credit for any lending in a rural or non-metropolitan area.

Finally, the agencies should take advantage of this opportunity to expand CRA to keep pace with a "modernized" financial services industry. CRA should be extended to all portions of the financial services industry, including insurance and securities portions of bank holding companies, which receive a public subsidy. The agencies should also use CRA to protect consumers from predatory lending by promulgating strong anti-predatory lending standards and considering predatory and high-cost loans of banks, including affiliates, in CRA scores.

Once again, I urge you to withdraw this proposal and maintain the current three-part CRA test to benefit low and moderate-income people and underserved communities across the country. Thank you for the opportunity to comment."

BACKGROUND

The Community Reinvestment Act, enacted in 1977, requires banks and thrifts to reinvest in the communities from which they receive deposits, stating that "regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered."

Currently, banks with assets over $250 million are evaluated on a three-part test: regulators review their lending, investment, and services to low- and moderate-income. Small banks, with assets less than $250 million, undergo a streamlined exam focused mostly on lending activities. Regulators may take a bank's CRA record into account when reviewing a bank's application for a merger or to open a branch.

All of the proposals in the last two years have focused on three main issues: the three-part test, community investment in rural areas, and data collection and disclosure. Proposals in 2003 and 2004 have proposed lifting the "small bank" asset cap to $500 million or $1 billion in assets, meaning that far fewer banks would be subject to the three-part test and have significantly smaller reinvestment obligations. The current proposal creates a new category of "intermediate small banks" for banks with assets between $250 million and $1 billion. These banks would be examined under a two-part test: lending and a new "community development" test. A bank would need a "Satisfactory" rating on both tests to get a "Satisfactory" CRA rating. The "community development" test would replace and combine the investment and service tests.

The agencies ask specifically for comment on how they should define "underserved rural areas." One option they specifically consider is the CDFI Fund's definition, incorporating outmigration and population loss as well as poverty and income statistics. The proposal does not include a definition of "underserved rural areas," but the regulators clearly are interested in developing one. Under the proposal, "intermediate small banks" would not have to report on originations and purchases of small business, farm, and community development loans.

ABOUT NCCA

National Community Capital Association (www.communitycapital.org) is the leading national network of more than 170 private-sector community development financial institutions (CDFIs). The network invests in small businesses, quality affordable housing, and vital community services that benefit economically disadvantaged people and communities. NCCA finances CDFIs in its network; provides training, consulting and information services; and is an advocate representing the CDFI network at the federal and state levels. NCCA's mission is to lead the community development finance system to scale through capital formation, policy, and capacity development. The core purpose of National Community Capital Association is to align capital with social, economic, and political justice.

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