JOHN STEWART COMPANY
September 15, 2004
Mr. Robert E. Feldman
Executive Secretary
Commercial/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
Dear: Mr. Feldman:
I am the President of the The John Stewart Company (JSCo), which both
develops low-income housing and manages almost 19,000 low-income housing
units throughout California. We are just one of the many organizations
committed to increasing the flow of private capital to our nation's low
and moderate income (LMI) communities.
We are very concerned that 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 will harm
affordable housing and community and economic development m low and
moderate income communities, particularly in rural areas.
As you know, the CRA was enacted to encourage federally insured
financial institutions to meet the credit needs of their communities,
including LMI persons. Pursuant to the CRA, communities, private
developers and nonprofit corporations partner with banks to leverage
limited federal subsidies with private capital for meeting communities'
needs. 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.
The FDIC's own data suggests that 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. Some states like Wyoming and Idaho would have
NO bank charters with a CRA impetus to invest in or provide services to
their communities, while others such as Vermont, Alaska, and Montana
would only have ONE such charter!' Because institutions with assets of
$250 million to $1 billion comprise substantial market share in rural
areas, this change means that many rural communities and states will'not
have any institutions required to offer services and investments that
benefit low and moderate income communities.
JSCo agrees with Senator Paul Sarbanes, ranking member of the Senate
Banking Committee, that the proposal is both an "extreme action" and an
example of "bad policy," and we URGE you not to adopt it. With public
subsidies drying up, now is NOT the time to eliminate regulatory
incentives for private capital to leverage scarce subsidy dollars. 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 attention to this matter, and for your commitment
to ensuring that private capital will continue to flow to, and benefit,
LMI households and distressed communities throughout our country.
Sincerely,
Jack D. Gardner
President & CEO
John Stewart Company
San Francisco, CA
Cc: Senator Diane Feinstein
Senator Barbara Boxer
House Democratic Leader Nancy Pelosi
