FOR IMMEDIATE RELEASE
ICBA Urges Streamlined CRA Exams
Reduced Regulation Would Spur Greater Community Development
Washington, D.C. (May 10, 2005) - The Independent Community Bankers of America (ICBA) urged the federal banking agencies today to alleviate the regulatory burden of the Community Reinvestment Act (CRA) on more community banks through a streamlined examination and a more flexible criteria for community development.
ICBA recommendations to the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Federal Reserve would allow more community banks to continue to engage in the financial activities that directly benefit the people and communities they serve. "Having the CRA breakpoint for streamlined exams at $1 billion is important and significant," said ICBA Executive Vice President Karen M. Thomas. "The current CRA large bank exam is not a good fit for large community banks and consumes resources that the banks could put to better use in their communities."
In a letter sent to the agencies today, ICBA outlined its support for revising the existing CRA rules, stating that, "Extending the streamlined exam to more community banks would … ensure the regulations emphasize performance over process and eliminate unnecessary regulatory burden."
"The ICBA supports including a community development criterion," the letter continued, "that considers lending, investments and services-in the exam for mid-tier banks between $250 million and $1 billion in assets." This flexible criterion will allow community banks to establish more effective local community development programs that meet distinct needs within their communities.
However, to realize greater regulatory relief benefits, as an alternative ICBA urged regulators to consider a simple increase in the size limit for the current small bank streamlined exam from $250 million to $500 million, and applying the new community development assessment to banks between $500 million and $1 billion in assets.
ICBA also urged the agencies to expand the definition of community development activities to recognize the unique challenges faced by rural communities, where inadequate public infrastructure is a significant roadblock to economic development and where it is often difficult to segregate low- and moderate-income areas.
"ICBA believes its proposals will reduce the regulatory burden on more community banks without weakening CRA," said Thomas. "We look forward to working with the Federal Reserve, the FDIC and the OCC to craft appropriate final rules and procedures that will benefit both community banks and the customers and communities that rely on them."
View the entire letter at www.icba.org/pressroom, and click on Letters to Regulators.