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March 29, 2004
Mr Robert E Feldman
Executive Secretary
Board of Directors
FDIC -ATTN: Comments/OES
550 17th St N.W.
Wash DC 20429
RE-CRA (proposed changes)
Dear Mr. Feldman:
Ms Foley, Senior Policy Analyst was kind enough to write to me on
March 25th (see attached letter). I had originally sent my comments to
Mr. Larry Goodman, Counsel, FDIC for proper distribution to those
handling CPA comments.
In capsule form and as brief as I can possibly be, I will re-visit an
event now 15 years old. On Thursday, March 23, 1989, The San Diego
Tribune reported "San Dieguito sale called off by SDN." SDN Bancorp,
parent of San Dieguito National Bank called off its proposed sale to
Wall Street, Financial Centers, Inc. Wall Street Financial failed to
gain approval for the merger from the Federal Reserve Bank of San
Francisco due in part to providing lending for low-income groups as
called for in the CRA of 1977.
I was actively involved with Wall Street Financial Centers parent,
Honolulu based Wall Street Financial Corp. who already owned a 4.9%
stake in San Dieguito.
Of great concern was the North County Reinvestment Committee who
wrote the Federal Reserve Bank asking it block the merger because it had
not provided enough credit to the poor in its service area. In my
initial letter to Mr. Goodman, resulting in Ms Foley's response, I
discussed that groups (like North County Reinvestment Committee) should
under any circumstance not be allowed to hold "hostage" any financial
entity because of CRA and offered a solution through non-bank
originators to meet CRA requirements if necessary. The point being, San
Diego's North County demographics do not avail itself to CRA
opportunities because of its zip code location, which should be the
basis for determining CRA compliance ---- in other words CRA credit for
lending in San Ysidro, National City, Chula Vista, through service
companies (originators) actively pursuing business in those areas and
where banks like SDN can purchase assets indirectly and reflect such on
the call report. Respectfully submitted:
Phil Sedgwick
5344 E Verde Lane
Phoenix, AZ 85018
January 21, 04
Mr Larry Goodman, Counsel FDIC
550 17th St N.W.
Washington, DC 20429
RE-Public Comment (Rule changes to the Community Reinvestment Act of
1977 ("CRA"))
Dear Mr. Goodman:
Today's edition of The Arizona Republic reports "Feds seek changes in
Community-lending law." I called the main switch board at the FDIC and
asked where to send public comments about the proposed CRA rule change.
I was put on hold for 10 minutes and was told by the operator that you
really don't send in those comments? I know that you will deliver my
comments to the proper section.
First and foremost few bankers that have complied with regulatory CRA
reviews would vote against not only "less frequent reviews" but a more
"stream lined review." My proposal, let "smaller" banks utilize their
direct and indirect lending by zip code. Regulatory reviews will match a
pre-designated zip code that fullfills a direct or indirect loan in a
low-income and minority area. Of special note, is the designation of
"predatory lending," which gives banks lower ratings under the CRA.
Because a bank has purchased say indirect retail installment home
improvement contracts from a "broker" who in fact has purchased these
contracts from a licensed home improvement contractor, and then sold
these contracts to a bank, at a "higher" interest rate, it is not a
"predatory lender." Rather, the bank has effectively utilized a "broker"
to satisfy CRA requirements who has utilized a contractor who has
typically sold a bathroom, kitchen, roof, or other home improvement on
"payments" with maturity rates of up to 120 months at a fixed rate of
interest. No different that Citigroups credit card portfolio and the
monthly payments made by millions of American's at "high" fixed rates.
Put another way, the "broker" and the contractor by virture of bringing
capital to previously "red lined" areas (zip codes) and who has sold a
home improvement retail installment contract to a bank, has in fact
contributed to the bank in meeting mandated CRA requirements. I don't
see how this business model that was incorporated by North Eastern
Holding Co Inc, a former New York based home improvement sales finance
company and the proposed CRA changes would thwart the administration's
goals of improving the economic status of minorities and immigrants. To
the contrary, this model would continue the flow of capital to these
areas based on credit scores provided by credit repositories (FICO
scores), which vary in all zip codes across this nation. Respectfully
submitted:
Phil Sedgwick
5344 E Verde Lane
Phoenix, AZ 85018
P.S. If a bank purchases a sub-prime FICO score they are not necessarily
"predatory."
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