LA FAMILY HOUSING CORPORATION
August 15, 2004
Donald E. Powell
Chairman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
John M. Reich
Vice Chairman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Thomas J. Curry
Director
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
John D. Hawke,
Jr.
Comptroller of the Currency
Office of the Comptroller of the Currency
250 E Street, SW
Washington, DC 20219 Dear Sirs:
LA Family Housing Corporation (LAFH) is a private nonprofit 501
(c) 3 organization formed in 1983. We provide emergency shelter,
transitional and permanent affordable housing, all combined with
supportive services, to over 74,000 homeless and low-income individuals
and families in Los Angeles. LAFH designs, develops, owns and manages
a portfolio ,consisting of 417 units. Between 1987 and 2003, LAFH
has completed 20 development projects, including new construction
and rehabilitation, single family housing, multifamily rental housing,
and single-room occupancy units. We currently have over 400 units,
both rental and homeownership, in our development pipeline.
Because of our involvement in helping families rebuild their lives
as well as our extensive affordable housing development work, we
are a direct example of the positive impact that the Community Reinvestment
Act (CRA) has made on strengthening America's
communities by requiring insured depository institutions to use their
deposits to meet the credit needs of low- and moderate-income (LMI)
communities.
We understand that the FDIC shortly will consider a proposed rule
change by the Office of Thrift Supervision (OTS) to increase the
asset threshold for the CRA small bank exam from $250 million to
$1 billion. We believe this proposal could have negative consequences
for hundreds of communities, and we urge you not to adopt it.
While we understand
that the OTS ruling is intended to help reduce regulatory burden
for
small banks, no studies have been conducted
on the potential benefits – or harm – of such a change.
There is considerable evidence to believe that proposal could have
severe, unintended consequences for the flow of much-needed private
capital and services to LMI communities.
If the FDIC adopts
the OTS' proposal, 2000 fewer insured institutions, with assets
of
nearly $1 trillion, would have far less impetus to
provide investments and services in LMI communities – and an
estimated $5 billion that would have been available, under the current
rules, for affordable housing and community development over the
next few years would be lost. Because institutions with assets between
$250 million and $1 billion comprise a substantial market share in
rural areas, the proposed change also means that in some states and
many communities there will no longer be any insured institutions
with a CRA impetus to invest in affordable housing, tax credits,
and even financial literacy training.
As Federal resources for affordable housing and community development
continue to dwindle, our nation's poorest communities can ill-afford
to lose billions of dollars in private investment and services. We
urge FDIC not to move forward with OTS' proposal, and we urge all
4 bank regulatory agencies to continue to consider rule changes that
update CRA for the communities the Act is intended to serve.
David S. Grunwald
Chief Executive Officer
LA Family Housing
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