Coachella Valley Housing Coalition
From: Patricia Sabala [mailto:psabala@cvhc.org]
Sent: Monday, October 04, 2004 1:20 PM
To: Comments
Subject: RIN 3064-AC50
October 4, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Re: The FDIC’s proposed change to the Community Reinvestment
Act’s definition of a “small bank.”
Dear Sir:
As a concerned citizen and as an employee of the Coachella Valley
Housing Coalition (CVHC), I am writing to express my adamant opposition
of any changes to the Community Reinvestment Act.
Situated in Southern California, about 100 miles east of Los Angeles,
the Coachella Valley is in a unique community known for its high-end
luxury homes and vacation resorts in Palm Springs and Indian Wells.
Little known is the fact that the Valley is primarily rural, and
economically sustained by low-wage service and agriculture industry
jobs.
The Coachella Valley Housing Coalition has committed 22 years to helping low
income people improve their living conditions through advocacy, research, and
the construction and operation of housing and community development projects.
These efforts have meant the construction of more than 2,500 single family
homes and apartment units for farmworkers, migrant farmworkers, seniors, and
individuals with special needs, HIV/Aids and other chronic illnesses.
The Community Reinvestment Act is a critical component to CVHC’s affordable
housing and community development efforts. According to Community Development
Digest, the FDIC shortly will consider adopting the Office of Thrift Supervision
(OTS) revision to the threshold for small institutions using streamlined evaluations
to $1 billion in assets. An increase to the threshold of what is considered
to be a small bank would devastate an already difficult working relationship
between low-income housing builders like ourselves and small banks, especially
in rural communities where we have found the need is greatest. According to
the National Community Reinvestment Coalition, changing of the “small
bank” definition will allow 2,000 insured institutions with total assets
of almost $1 trillion and branches in more than 18,800 communities (96% of
all FDIC-regulated banks) to receive a less stringent CRA exam. Because institutions
with assets of $250 million to $1 billion comprise substantial market share
in rural areas such as ours, a change will mean rural communities will have
less access to institutions required to offer services and investments that
benefit low and moderate income communities. The private market without regulatory
incentives would not reach many rural and impoverished areas. In essence, the
proposed FDIC rule would exempt many of our community’s critical partners
from the effective and productive requirements currently in place. CRA has
been a vital aspect of reinvestment in disenfranchised communities and should
be held at a high standard of reporting due to historical discriminatory lending
practices which lead to blight and disinvestment in low-income communities.
Small banks have always been an integral part of the communities they serve—they
are more familiar with their surroundings and clientele, and their banking
needs—CRA forces all banks to get out and serve the neighborhoods in
which they operate. When banks infuse their services into a community that
community thrives, businesses thrive, people purchase homes, etc. To reduce
CRA’s mandate for “small” banks will cause banks to focus
on easy and more profitable avenues of business rather than working towards
a broader lending portfolio. Because government subsidies for housing are shrinking,
now is not the time to decrease regulations for private capital to leverage
scarce subsidy dollars.
CVHC has benefited greatly from CRA’s mandate on both large and small
banks, through various loans and grants over the years. Communities will lose
with less stringent CRA standards. I urge FDIC not to move forward with the
OTS proposed rule.
I appreciate the opportunity to share with you my impressions on any changes
proposed for the Community Reinvestment Act as it serves as a great tool for
all our housing and community building efforts. Thank you for your consideration
of my comments.
Sincerely,
Patricia Sabala
Housing Counselor
45-701 Monroe Street, Suite G
Indio, CA
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