Federal Deposit
Insurance Corporation

From: Bethany Sanchez [mailto:bethany_sanchez@hotmail.com]
Sent: Tuesday, December 13, 2005 5:11 PM
To: Comments
Subject: Re: RIN 3064-AC95

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, D.C. 20429

Re: RIN 3064-AC95

Dear Mr. Feldman:

I am writing on behalf of the board, staff and membership of the Metropolitan Milwaukee Fair Housing Council (MMFHC), to urge you to drop the proposal to preempt certain state laws in connection with the lending and deposit activities of state-chartered banks. This proposal would strip states of their power to enforce and enact meaningful consumer protections for its citizens.

MMFHC coordinates the work of a 50-partner initiative called Strategies to Overcome Predatory Practices (STOPP). STOPP utilizes a coalition of community-based organizations, housing industry representatives and government to identify and eliminate predatory lending practices throughout Milwaukee County. It is because of our work in helping victims of predatory loans that we are all too familiar with the unfair and often unconscionable practices of lenders in the community.

The implications of the FDIC’s proposal are profound, allowing FDIC-chartered banks to skirt strong consumer protection laws in states in which they make loans and follow weaker laws of the state in which they are headquartered. If the FDIC enacts this proposal, state-chartered banks will be tempted to place their headquarters in states with weak laws and then “export” these laws to other states in which they make loans. The end result would be a regulatory race to the bottom and the stripping away of states rights, leaving consumers without strong protections against predatory lenders.

A recent Federal Reserve study of the new 2004 HMDA data confirmed two National Community Reinvestment Coalition (NCRC) reports, which found that people of color continue to pay more for loans, as they are more likely to receive high cost loans than whites. A 2003 NCRC report that looked at ten large metropolitan areas: Atlanta, Baltimore, Cleveland, Detroit, Houston, Los Angeles, Milwaukee, New York, St. Louis, and Washington DC, showed that the percent of African-Americans in a census tract had the strongest impact on subprime refinance lending in Houston, Milwaukee, and Detroit. Even after holding income, creditworthiness, and housing market factors constant, going from an all white to an all African-American neighborhood (100 percent of the census tract residents are African-Americans) increased the portion of subprime loans by 29 percentage points in Milwaukee.

This study, which quite plainly shows price discrimination and steering, coupled with the new HMDA data, suggests that predatory lending is a widespread problem and that states must have the authority to clamp down on predatory practices.

Ultimately, this proposal will further undermine the gains American communities and consumers have made in homeownership, community development and wealth building.

I strongly urge the FDIC to drop its proposal and to remind state-chartered banks that they have a moral and civic responsibility to respect the will and the rights of the states to protect its citizens. Thank you for your consideration of our comments.

Sincerely,

Bethany Sanchez
Director, Community and Economic Development
Metropolitan Milwaukee Fair Housing Council
600 E. Mason, Suite 200
Milwaukee, WI 53202