By Eugene T. Lowe
October 18, 2004

Mayors are taking up their pens in opposition to the Federal Deposit Insurance Corporation's (FDIC) proposal to weaken the Community Reinvestment Act (CRA) exam for mid'size banks. The FDIC proposal would no longer test banks with assets up to $1 billion on the number of services provided to low- and moderate-income communities. Under existing policy, banks with assets over $250 million are tested on lending, investments and services.

While many members of The U.S. Conference of Mayors will not have the majority of its banks regulated by the FDIC, mayors are concerned because of the impact that the proposal will have in the nation. In a letter to the FDIC, Cleveland Mayor Jane L. Campbell said, "... the proposals, if enacted, will have a chilling effect on lending throughout this country."

The FDIC proposal would weaken the CRA exam for 5,000 banks with assets over $754 billion. These banks have more than 18,000 branches. There is little doubt that the result of the FDIC proposal will be significantly fewer loans and investments in affordable rental housing, health clinics, and economic development projects. Local governments would lose the ability to implement a large number of community development activities.

Typical of many mayors' concerns are voiced in Campbell's letter: "It was our use of CRA regulations as a tool that catalyzed and continues to play a major role in the incredible increase in residential, small business and community development lending. The partnerships have also fostered an increase in investments and grants that have benefitted our citizens and businesses. I submit that Cleveland is an example of the benefits of having strong community reinvestment legislation and enforcement."

Mayors who have not commented on the FDIC proposal can still do so by October 20. Email comments to the FDIC at: comments@fdic.gov or fax to 202-898-8788. You must have the docket number (RIN number) in the subject line of the e- mail. Address letter to:

Mr. Robert E. Feldman, Executive Secretary, Attention: Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th St., NW 20429. Include in the subject line: RE: RIN 3064-AC50.