January 9, 2006
Office of the Comptroller of the Currency
250 E. K Street, SW
Mail Stop 1-5
Washington, DC 20219
Re: Docket Number 05-17
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve
20th Street and Constitution Ave., NW
Washington, DC 20551 Re: Docket No.OP-1240
Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RIN number 3064-AC97
Dear Sir or Madam:
Local Initiatives Support Corporation appreciates the opportunity to
comment on proposed interagency questions and answers regarding the
Community Reinvestment Act. LISC is a leading nonprofit community
development support organization, with extensive experience in rural as well
as urban areas.
LISC supports or is comfortable with most of the proposed policies. For
example, we appreciate that in disaster areas, the agencies will give
greater weight to those activities that are most responsive to community
needs, including the needs of low- or moderate-income individuals or
However, we do not support favorable consideration of upper-income
housing activities in distressed and underserved non-metropolitan
middle-income areas. We are more comfortable, however, with recognition for
middle-income housing activities in such areas.
First, CRA recognition for any activities not primarily benefiting
low- or moderate-income (LMI) people or places marks a significant policy
departure. We recognize the validity of some exceptions to the traditional
approach, and we are generally comfortable that the agencies have limited
this departure to distressed and underserved non-metropolitan areas.
Nevertheless, this new approach does bear risks, and therefore should be
An abiding concern is the risk that recognizing too broad a range of
activities will obviate a banks need to benefit LMI individuals. In
short, if CRA encompasses too much, it risks losing its unique value.
Moreover, we generally do not see a shortage of financing for
upper-income housing, even in distressed or underserved rural areas. We
often see luxury homes and condominiums in rural areas, especially near
recreational opportunities such as ski resorts and coastal areas.
The small scale of rural markets means that relatively modest
developments can trigger substantial change in conditions. Sometimes this
is good because revitalization can take hold. But in other cases we see
previously cold rural markets heat up to the point where affordable
housing disappears, while rising land costs combine with infrastructure
limitations to make the development of new affordable housing all but
In such contexts, we are much more comfortable with favorable CRA
consideration for middle-income (and of course LMI) housing activities. In
distressed non-metropolitan middle-income areas, we understand that
tourism is often the basis for economic development and that upper-income
housing is part of that process. However, we do not believe that CRA
recognition will make or break that activity. Such activity typically
raises the need for LMI and middle-income housing, which the marketplace
has far more difficulty providing and, in our view, is more consistent
with the spirit of CRA.
In underserved non-metropolitan middle-income areas, we are
comfortable with CRA recognition for mixed-income housing, provided that
LMI families would benefit substantially, and not just incidentally.
This concludes our comments.
Benson F. Roberts
Senior Vice President for Policy and Program Development