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National Hispanic Leadership Agenda
April 5, 2004
Docket No. 04-06
Communications Division
Public Information Room, Mailstop 1-5
Office of the Comptroller of the Currency
250 E St. SW,
Washington 20219
Docket No. R-1181
Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th St NW
Washington DC 20429
Regulation Comments, Attention: No. 2004-04
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street NW
Washington DC 20552
Dear Officials of Federal Bank and Thrift Agencies:
On behalf of the National Hispanic Leadership Agenda (NHLA), a
coalition of national Hispanic public policy and civil rights
organizations, I am writing to urge you to withdraw the proposed changes
to the Community Reinvestment Act (CRA) regulations.
Since 1977, the CRA has worked to protect the economic development of
low- and moderate- income communities and has been instrumental in
increasing access to affordable housing, homeownership and expanding
small business opportunities. While current CRA regulations provide for
the evaluation of the level of banking services and investment in
neighborhoods traditionally underserved by lending institutions;
discrimination, predatory lending, and a lack of financial resources and
services continue to disproportionately affect Americans of Hispanic
descent and minority low-and moderate – income neighborhoods.
The proposed CRA regulation changes would not only weaken current
standards and threaten community reinvestment but also make it more
difficult for regulatory agencies to protect neighborhoods already at
risk. The proposed regulatory changes would reduce the quality and
accuracy of CRA exams by eliminating the investment and service portions
for banks and thrifts with assets between $250 and $500 million.
According to the FDIC, about 1,111 banks fall within that bracket and
account for an estimated $387 billion in assets. Because these banks
would no longer be held accountable--for investing in low income-housing
tax credits or the provision of bank branches, checking accounts,
individual development accounts (IDA’s), or debit card services--we are
deeply concerned that these changes would result in considerably less
access to banking services and capital for underserved communities.
Proposed CRA regulation changes also weaken federal policy designed
to prevent predatory lending by establishing a standard that would
narrowly define predatory lending as “loans based on the foreclosure
value of the collateral” and that does not take into consideration the
borrower’s ability to repay. Predatory lending that might result from
packing of fees into mortgage loans, high prepayment penalties,
mandatory arbitration and other numerous abuses would not be defined as
such, therefore, actually permitting abusive lending practices, instead
of setting higher penalties for offending banks.
Hispanic Americans are disproportionately targets of predatory
lending due to linguistic and cultural barriers including limited
English proficiency, not understanding or trusting banking institutions
and having little or poor credit. NHLA feels this weak anti-predatory
lending “screen” would actually facilitate predatory lending and make it
more difficult to hold financial institutions accountable for compliance
with consumer protection laws.
Further limitation of community banking options; will negatively
impact the economic and social development of low and moderate-income
communities. NHLA feels the proposed changes to CRA will significantly
reduce investment in community economic development initiatives, impede
access to banking services, and hinder the administration’s goals of
increasing minority homeownership.
Existing financial protections should be developed and evaluated to
better serve the development needs of underserved communities.
Regulatory changes should not result in curtailing current banking and
community investment opportunities, but should continue to hold
financial institutions accountable for their performance in fulfilling
the financial needs of the communities in which they are doing business.
Sincerely,
Manuel Mirabal
Chair
National Hispanic Leadership Agenda
1901 L St., Ste 802
Washington, DC 20036
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