Hundreds of thousands of small businesses are closing for good. Temporary layoffs at larger companies are becoming permanent. But the country's largest banks, which together serve a majority of Americans through loans, credit cards or deposit services, are not raising an alarm. In their third-quarter earnings reports this week, big banks have said they are generally prepared for a wave of loan defaults they expect in the second half of next year. And their own fortunes are just fine: A trading and investment banking bonanza on Wall Street is helping them stay profitable. A few common themes have emerged from the reports.
Kat Taylor started a bank, a venture capital firm and an agribusiness to use capitalism’s toolbox to fight systemic racism, environmental destruction and economic inequality. Way back in 2007 (the stone age in impact investing), Taylor and Steyer launched an idea they’d talked about for years: use a charitable foundation to start a bank that would lend to nonprofits and do-gooder businesses and direct its profits back to their environmental and community charitable causes. With Taylor as CEO, Beneficial State Bank has grown into a $1.1 billion institution with 13 branches stretching from Washington to Southern California.
Consumers on the prowl for higher rates on their savings or more places to spread out their cash have a few shortcuts. Now there’s a new competitor to these savings account rate finders: the German fintech Deposit Solutions. Through SaveBetter.com, an online portal that marks Deposit Solutions’ first foray into the U.S., consumers can shop offerings from a variety of banks. They can open one or more savings accounts from the available banks, with certificates of deposit expected to be available by the end of the year, but manage them all through a single SaveBetter account. “For Central Bank of Kansas City, it’s another source of deposits," said Trent Sorbe, founder and president of Central Payments. "It’s another interesting way in which a small community bank, a CDFI in Kansas City, can diversify its deposit acquisition strategy, reach markets outside of Kansas City and be competitive with larger providers.
The Economic Mobility Corps (EMC) is a joint initiative of the Community Development Financial Institutions Fund (CDFI Fund) and AmeriCorps that places full-time national service members in Certified Community Development Financial Institutions (CDFIs) to enhance their capacity to provide financial literacy, financial planning, budgeting, saving, and other financial counseling activities. Economic Mobility Corps members placed in Certified CDFIs will receive training on the principles of financial counseling and financial literacy and assist CDFIs in promoting access to capital and credit in distressed and underserved areas. A total of $1.9 million is available for awards to EMC recipients. Applications are due to CNCS by 5:00 p.m. Eastern Time on Wednesday, January 6, 2021.
A two-track recovery is emerging from the country's pandemic-driven economiccontraction. Some workers, companies and regions show signs of coming out fine or evenstronger. The rest are mired in a deep decline with an uncertain path ahead. Just months ago, economists were predicting a V-shaped recovery—a rapid rebound froma steep fall—or a U-shaped path—a prolonged downturn before healing began. What has developed is more like a K. On the upper arm of the K are well-educated andwell-off people, businesses tied to the digital economy or supplying domestic necessities,and regions such as tech-forward Western cities. By and large, they are prospering. On the bottom arm are lower-wage workers with fewer credentials, old-line businessesand regions tied to tourism and public gatherings. They can expect to bear years-longscars from the crisis.
The Senate on Wednesday passed a short-term funding bill just hours before the deadline to prevent a government shutdown. Senators voted 84 to 10 to keep the government funded at current levels through Dec. 11, setting up another funding fight after the November elections and right before the holidays. The funding bill, passed by the House earlier this month, now heads to President Trump's desk, where he is expected to sign it before midnight to keep the government running.
A new House Democratic economic stimulus plan would funnel billions of dollars to Community Development Financial Institutions, reauthorize the Paycheck Protection Program and allow marijuana banking. Those are just some of the provisions contained in the 2,153-page bill, which has formed the basis for renewed negotiations between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin. The Democratic bill also calls for $1 billion for CDFIs for financial support and technical assistance, and a $2 billion “emergency appropriation” for the institutions, as well as up to $15 billion in PPP loans to be made by CDFIs and other community lenders.
While the typical bank may be able to promise your money will do well under its stewardship, few commercial options promise your money will do good, as well. That's where community development financial institutions (CDFIs) come in. A CDFI is a private financial institution whose primary mission is to help communities that are traditionally left out of banking and investing options. Banking customers who want to see their money help increase economic independence in underserved communities and help end the racial wealth gap can turn to a CDFI for their banking needs. Here's what you need to know about CDFIs and how they may fit into your financial life.
First Southwest Bank was awarded Community/Rural Lender of the Year by the Colorado Small Business Administration during their virtual conference for National Small Business Week. Sherry Waner, FSWB's Chief Development Officer, accepted the award on behalf of the bank. Examples of rural businesses across the state that FSWB has helped through SBA loans include GEOMAT, Phoenix Recycling, Espinoza Consulting Services, Agile Space Industries, Chinook Medical Gear and Ace Towing. During the ongoing small business impacts of COVID-19, First Southwest Bank has completed 805 Paycheck Protection Program loans through the SBA to small businesses across Colorado to date.
The federal government is cracking down on alleged fraud in the Paycheck Protection Program. The Justice Department recently filed nearly 60 charges involving what it says are attempts to bilk over $175 million out of the program. Meanwhile, legitimate borrowers are working to get their loans forgiven. Now the government’s dilemma is whether to make it easy to get a PPP loan forgiven. One idea is automatically forgiving loans under $150,000, a provision of the Paycheck Protection Small Business Forgiveness Act that’s been introduced to the Senate. Robert James II at Carver State Bank in Georgia said that would help the bank avoid collecting on risky loans. “If the government makes it onerous and difficult for customers to get the loans forgiven, then we’re gonna really have a very unstable, potentially harmful asset on our books,” James said.