NEIGHBORHOOD LENDING PARTNERS, INC.
From: Graves, Mary [mailto:mgraves@nlp-inc.com]
Sent: Wednesday, September 15, 2004 11:00 AM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50
Neighborhood Lending Partners, Inc. is a partnership between banks,
thrifts, local governments, and the affordable housing community. Our
members are banks, and thrift institutions throughout the state of
Florida. Membership in NLP gives these institutions a way to support
affordable housing while sharing the costs and risks. Our members are
comprised of 97 insured depository institutions. Since 1992, NLP has
provided more than $163 million in funds for building and/or for
rehabilitating more than 7800 units of affordable housing. Membership in
NLP also enhances institutions’ ability to meet community credit needs,
in accordance with the Community Reinvestment Act.
NLP, like many other successful, nonprofit providers of affordable
housing throughout the country, relies on our bank partners as sources
of private capital to leverage limited federal subsidies. The Community
Reinvestment Act encourages local institutions to assist in the creation
and expansion of small business, and the revitalization of
neighborhoods, and rural areas previously considered unbankable. The CRA
is vital to achieving investment in these underserved areas.
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, including many in rural areas, and we urge you not to
adopt it.
While we understand that the OTS ruling is intended to help reduce
the 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 low- and moderate-income
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 have 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.
Sincerely,
Debra S. Reyes
CEO
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