Emergency Loan Program

In your May 10 article on the city of Los Angeles’ Earthquake Emergency Loan program, you reported a discussion about the rationale for the city’s emergency loan underwriting compared to private industry standards (“Agency’s Handling of Quake Loans Assailed”). I argued that the necessarily more rigorous private sector credit standards for borrowers would have disqualified a majority of owners of damaged apartment buildings and that the city emergency loans deliberately adopted a lower credit standard in order to expedite loan making and jump-start earthquake recovery.

The point was that private lenders operating under both market and regulatory constraints could not have succeeded in an earthquake recovery loan program. Unfortunately, Bank of America was used in the discussion as an example of those industrywide constraints; there was no intention on my part to suggest that Bank of America has had anything but a positive role in helping Los Angeles property owners rebuild their homes and apartments. In fact, Bank of America has just announced a partnership with the Los Angeles Housing Department to help fill a $26-million shortfall of public earthquake loan funds by making reduced interest rate $25,000 loans to homeowners still needing to make earthquake repairs.

GARY W. SQUIER

General Manager,

Los Angeles Housing Department