mike1st

Give Loan Program a Chance

I am writing in response to your April 14 article about the Los Angeles Community Development Bank’s (LACDB) co-lending program, “Inner City Can’t Get the Money.” Despite my spending considerable time on the phone with your reporter and painstakingly taking him through the issue related to the co-lending program at the LACDB, he chose to: (1) quote me completely out of context; and (2) failed to report, as I told him, that Founders National Bank of Los Angeles had previously considered several loans under the LACDB program, but that they were eventually turned down due to credit considerations.

With regard to the article as a whole, Mr. Young is far too harsh in his assessment of the progress made by the LACDB and does not fully understand the intricacies of starting an institution such as the LACDB. Eighteen months is a remarkably short period of time in which to staff a new organization, establish policies and procedures, develop lending programs and credit approval criteria, find individuals generally bankers, businessmen and community leaders who are willing to serve on the LACDB’s various Loan Committees with no compensation and market the bank’s various programs to commercial lenders, potential borrowers and the inner-city community in general.

According to the article, the LACDB has funded 14 loans totaling $8.9 million thus far ($2.7 million in the co-lending program and $6.2 million in direct loans), with over $15.5 million in the pipeline. This is an exemplary record, especially when you consider that these loans which do not qualify under conventional financing standards are usually more difficult and labor intensive to analyze, structure and fund.

While initial expectations were unreasonably high and there was disappointment when the LACDB’s programs were not up and running sooner, in retrospect, this was an unrealistic view in light of the real world task of establishing an institution such as the LACDB from scratch. I think Bob Kemp and his staff should be lauded for what they have achieved so far and encouraged to continue their efforts.

PETER B. BARASH

Vice President

Founders National Bank

Los Angeles