I am writing to thank you for standing up for community banks and helping to lift the huge regulatory burden that is making it difficult for them to compete. Recently, a number of your colleagues wrote to the bank and thrift regulatory agencies urging them to withdraw their proposal to streamline Community Reinvestment Act compliance for hundreds of community banks. By declining to sign this letter, you have increased the chances that the agencies will adopt the regulation in final form.
This proposal would increase by over 1,100 the number of community banks eligible for the less-costly examination procedure by raising the asset threshold from $250 million to $500 million. This will save each of those institutions fifty percent or more of the CRA compliance cost they now bear under the large-bank procedure, while maintaining the requirement that they continue to serve the needs of their local communities. Reducing their costs will enhance their ability to reinvest in their communities, since that is their reason for doing business in the first place.
It is important to realize that the agencies' proposal would change the percentage of industry assets subject to the large bank CRA exam only slightly, from just over 90 to just below 90 percent. That is still far more than the 83 percent of assets covered by the large bank exam when the original $250 million threshold was set in 1995. In fact, the agencies' proposed increase in the size cut-off only partially adjusts the threshold to accommodate the increase in the average size of the nation's community banks.
Again, ICBA thanks you for your continued support for community banking.
Camden R. Fine
President & CEO