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FDIC Federal Register Citations

SOUTH COUNTY HOUSING CORPORATION

From: Poncho Guevara [mailto:poncho@scounty.com]
Sent: Thursday, October 07, 2004 2:19 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

Directors of the FDIC:
On behalf of South County Housing Corporation, I wanted to express our sincere concern over the proposed rule changes by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC) to offer “streamlined” testing under the Community Reinvestment Act (CRA), to institutions up to $1 billion in assets. As a regional housing and community development corporation that has served southern Silicon Valley and California’s Central Coast region for over 25 years, we are convinced that the proposed rule changes will harm affordable housing and community and economic development in low- and moderate-income (LMI) communities, particularly in the rural areas we serve.

It is no secret that Silicon Valley remains a potent economic force despite the lingering economic downturn. However, the residential real estate market remains dramatically overheated, conflating median home sales prices above $600,000 for the first time in the Bay Area. The impact of this housing crisis on LMI families in our community is particularly severe as many are displaced from the region or give up on the dream of homeownership altogether. It goes without saying that this represents a severe threat to the regional economy that requires a diverse workforce to staff our growing needs in the service, education and public safety sectors.

CRA was enacted to encourage federally insured financial institutions to meet the credit needs of their communities, including LMI persons. South County Housing partners with banks to leverage limited federal subsidies with private capital to build affordable housing and create homeownership opportunities to our diverse community. Having developed over 2000 multi-family units and single family homes in our history, we can attest to the incredible success story of CRA, which has facilitated outstanding partnerships between our regional banks, our non-profit organization, and the families we serve.

The proposal to increase the threshold for “streamlined” testing under CRA to institutions up to $1 billion in assets will pull the rug out from many of these partnerships. From the FDIC’s own data, the proposed rule change by 2 of the 4 bank regulatory agencies would eliminate any regulatory incentive for at least 1300 banks to include LMI persons in their community services and investments. In California alone, we would lose the investment potential of banks with over $43 billion in assets.

We agree with description of the proposal by Senator Paul Sarbanes, ranking member of the Senate Banking Committee, as an “extreme action” and “bad policy”, and urge you not to adopt it. Now is not the time to reduce the private capital available to leverage dwindling Federal resources. All communities deserve evidence that financial institutions enjoying the benefits of Federal deposit insurance are documenting how they are helping to meet the credit needs of their communities.

Thank you for your consideration. If you have any questions about our position, please do not hesitate to contact Poncho Guevara in our office at 408-843-9222.

Sincerely,
Dennis Lalor
Executive Director

Last Updated 10/13/2004 regs@fdic.gov

Last Updated: August 4, 2024