National Latino
Capital & Entrepreneurship Institute
September 16, 2004
Mr. Robert Feldman
Executive Secretary
Attention Comments/Legal ESS
Federal Deposit Insurance Corp.
550 17th Street NW
Washington DC, 20429-9990
Re: RIN 3064-AC50
Dear Mr. Feldman;
The purpose of
this letter is to inform you that the National Latino Capital & Entrepreneurship Institute (NLCEI), a California-based
non-profit, does not support the Federal Deposit Insurance Corporation’s
plan to modify the threshold for CRA examination to dilute Community
Reinvestment Act requirements for institutions with assets less than
$1B. The reduced requirements would include modification of testing
requirements on the number of investments and services in California’s
Latino low and moderate-income areas. Secondly, the effect of this
modification would be to allow mid sized banks to reduce their community
development activities vital to economic robustness of our region.
This ruling would apply to all locally headquartered banks in San
Diego and would only exclude the very large national banks. It would
create an unequal playing field in the banking industry in this region.
It would allow for market domination in major geographical areas
of the County for specific products and services. It would exclude
Latino and other ethnic and lower income residents from basic banking
services thus being in direct violation of the federal Community
Reinvestment Act and quite possibly the Fair Housing Act.
The effect would be to encourage smaller banks to display an acute
disregard for their obligation to the larger community with respect
to CRA reinvestment and community development efforts. Branches are
almost exclusively in suburban, wealthier communities. The smaller
banks very seldom participate in regional consortia or directly offer
products and services to the poorly banked or unbanked.
Promoting Exclusionary Lending Policies for Underserved Markets
Smaller banks in San Diego are a growth industry. We grow banks
for larger, multi- national institutions. This is part of the reason
that these banks eschew CRA. It may interfere with their purchase
by larger banks. The small banks exist not for the benefit of the
consumer such as the underserved but rather for a select number of
shareholders with ample financial capital seeking high financial
not socio-economic returns. CRA regulations (however limited) are
the only link to the larger community required by a bank charter.
As an active
participant in San Diego’s City/ County Reinvestment
Task Force (RTF) activities in the last few years, we support the
RTF’s planning and urban reinvestment strategy and related
projects. It has an extraordinary record of success in facilitating
access to capital in underserved markets generating billions of home
loans, small business loans, affordable housing and community investments
($1.9B in 2003). Through local attention to the CRA and long term
strategic planning and analysis the CRA has become one of the primary
tools for community stability and revitalization in the region. These
accomplishments occur because of the “partnership’ that
has been forged among organizations such as NLCEI, the larger community,
lenders and government. The partnership depends on each party bringing
its full authority and potential to the work.
Government has
provided much protection and risk diversion with affordable housing,
investments
and small micro lending efforts.
This was offered with the confidence that the lenders would equally
commit. The RTF has done constant and disciplined assessment of credit
access and through dialogue, face to face, many new and innovative
solutions have been created, so much so that a thriving and profitable “industry” has
emerged in this region focused on economically healthy communities.
Therefore, we
urge you to rescind your intent to reduce CRA related requirements
for smaller
banks. They need to be included to serve
all markets and foster recognition that they are an essential part
of a larger community and can contribute to the region’s overall
economic diversity and growth.
Sincerely,
Jesus Arguelles
Acting Chair
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