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  • Comment Detail

  • Date: 01/12/15
    First Name: Teneshia
    Last Name: Taylor
    Organization: Community Alliance Management, LLC
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA39

  • Comment

    Please accept these comments relative to RIN 2590-AA39, on behalf of Community Alliance Management, LLC. (CAM, LLC.). In our estimation the proposed rule would alter the relationship between Federal Home Loan Banks (FHLB) and their member banks and harmful to affordable housing.
    CAM, LLC is a Certified Development entity (CDE) based in the Town of Davie and Broward County Florida. The organization provides housing development services and access to capital to finance housing and community development projects for the underserved population in Broward County. These projects and investments are targeted to very-low income households and designated community reinvestment areas (CRAs). Our organization works directly with low-income individuals and in partnership with community based organizations with a similar mission.
    The neighborhoods we serve require access to credit and capital to build new housing, rehab existing stock and stimulate community investment. An arbitrary asset test for continued FHLB membership will achieve the opposite effect by reducing the supply of capital and hurt communities in the process.
    For example, the requirement will have the same effect as the Federal Reserve increasing the reserve requirement for commercial banks. Requiring an applicant to maintain a percentage of its assets in home mortgage loans reduces the entity’s liquidity, therefore reducing loanable funds to the community and qualified LIC’s that it serves.
    Secondly, the proposed requirement would preclude CDFI and CDE’s whose primary service is micro-lending to small business from membership, therefore restricting access to capital to the underserved communities it serves. There are CDFIs and CDEs with investments that take on the form of equity or participation, particularly with economic development projects. Business loans may be secured by real estate, but may also take on the form of an equity investment (i.e. CDFI VC funding) or secured by non-real estate assets of the business.
    Specifically as it pertains to CDFI’s and CDE’s, like CAM, LLC., the requirement to hold long 1% of our assets in long-term mortgage loans would impair our financials by restricting cash and reducing liquidity. Also, we would be unable to meet the 1% test and very likely terminate FHLB membership. In this regard, the proposed rule undermines the very opportunity for CDFI- FHLB collaboration, created by Congress when it passed HERA in 2008.
    Further, the proposed rule makes membership in the FHLB less attractive to banks and credit unions since continued access to FHLB funding will be contingent on new ongoing asset tests. This will no doubt result in decreased lending by the FHLB, hurt earnings and consequently reducing Affordable Housing Program (AHP) funds, which are significant to community development and affordable housing finance.
    For the above reasons, the CAM, LLC. Respectfully requests that the FHFA withdraw the NPR. Again, thank you for the opportunity to comment and for your consideration.