SOUTH COUNTY HOUSING CORPORATION
From: Poncho Guevara [mailto:poncho@scounty.com]
Sent: Thursday, October 07, 2004 2:19 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50
Directors of the FDIC:
On behalf of South County Housing Corporation, I wanted to express our
sincere concern over the proposed rule changes by the Office of Thrift
Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC)
to offer “streamlined” testing under the Community Reinvestment Act (CRA),
to institutions up to $1 billion in assets. As a regional housing and
community development corporation that has served southern Silicon
Valley and California’s Central Coast region for over 25 years, we are
convinced that the proposed rule changes will harm affordable housing
and community and economic development in low- and moderate-income (LMI)
communities, particularly in the rural areas we serve.
It is no secret that Silicon Valley remains a potent economic force
despite the lingering economic downturn. However, the residential real
estate market remains dramatically overheated, conflating median home
sales prices above $600,000 for the first time in the Bay Area. The
impact of this housing crisis on LMI families in our community is
particularly severe as many are displaced from the region or give up on
the dream of homeownership altogether. It goes without saying that this
represents a severe threat to the regional economy that requires a
diverse workforce to staff our growing needs in the service, education
and public safety sectors.
CRA was enacted to encourage federally insured financial institutions
to meet the credit needs of their communities, including LMI persons.
South County Housing partners with banks to leverage limited federal
subsidies with private capital to build affordable housing and create
homeownership opportunities to our diverse community. Having developed
over 2000 multi-family units and single family homes in our history, we
can attest to the incredible success story of CRA, which has facilitated
outstanding partnerships between our regional banks, our non-profit
organization, and the families we serve.
The proposal to increase the threshold for “streamlined” testing
under CRA to institutions up to $1 billion in assets will pull the rug
out from many of these partnerships. From the FDIC’s own data, the
proposed rule change by 2 of the 4 bank regulatory agencies would
eliminate any regulatory incentive for at least 1300 banks to include
LMI persons in their community services and investments. In California
alone, we would lose the investment potential of banks with over $43
billion in assets.
We agree with description of the proposal by Senator Paul Sarbanes,
ranking member of the Senate Banking Committee, as an “extreme action”
and “bad policy”, and urge you not to adopt it. Now is not the time to
reduce the private capital available to leverage dwindling Federal
resources. All communities deserve evidence that financial institutions
enjoying the benefits of Federal deposit insurance are documenting how
they are helping to meet the credit needs of their communities.
Thank you for your consideration. If you have any questions about our
position, please do not hesitate to contact Poncho Guevara in our office
at 408-843-9222.
Sincerely,
Dennis Lalor
Executive Director
