On June 2, Bank of America made a $1 billion, four-year commitment to advance racial equality and economic opportunity. Today, the company is announcing its initial progress by directing one-third, or $300 million, of its $1 billion commitment to four key areas across 91 U.S. markets and globally: $25 million in support of jobs initiatives in Black and Hispanic/Latino communities, $25 million in support of community outreach and initiatives, $50 million in direct equity investments to Minority Depository Institutions (MDIs), and $200 million of proprietary equity investments in minority entrepreneurs, businesses and funds. MDI recipients will include First Independence bank and Optus Bank.
Alabama One Credit Union in Tuscaloosa announced Thursday it has agreed to buy First Bank of Linden, an $82 million-asset, single-branch institution roughly 100 miles west of the state capital, Montgomery. The deal represents the credit union's second takeover of 2020, following a July merger that brought Alabama Rural Electric Credit Union under the Alabama One umbrella. Alabama One CEO Bill Wells said the motivation for the deal was geographical, as it would expand the credit union's footprint in western Alabama, which the executive sees as strategically important.
First Southwest Bank, a community development financial institution, is forging links with its Native American neighbors by offering opportunities for career and economic development. FSWB’s partner nonprofit, the First Southwest Community Fund (FSWCF), is another tool the community bank is using to connect with the Native population. It has created a pilot loan program dubbed the Native American Entrepreneur Loan Fund.
PayPal has just deposited $50 million in an account at Optus Bank, a minority-owned institution in Columbia, S.C., that has $155 million in assets. As unlikely as this pairing may sound, it happened relatively quickly. In June, PayPal announced a $530 million commitment to support minority communities and businesses in the U.S., especially those hardest hit by the pandemic, to help address economic inequality. Dominik Mjartan, Optus Bank's CEO, obtained a contact at PayPal through a friend and set in motion a conversation through which the San Jose, Calif., payment giant made Optus one if its recipients. In an interview, Mjartan told the story of how the new funding came about, what he intends to do with it and why so many financial hurdles still exist for Black-owned businesses.
CFBancCorporation ("City First") in Washington, DC and Broadway Financial Corporation ("Broadway," Nasdaq: BYFC) in Los Angeles, CAannounced today that they have entered into a transformational Merger of Equals agreement to create the largest Black-led Minority Depository Institution (MDI) in the nation with more than $1 billion in combined assets under management and approximately $850 million in total depository institution assets (as of June 30, 2020). Combining the two institutions will increase their collective commercial lending capacity for investments in multifamily affordable housing, small businesses, and nonprofit development in financially underserved urban areas, while creating a national platform for impact investors.
Black Americans have been hit disproportionately hard by the Covid-19 pandemic, and the White-led financial institutions that could theoretically offer economic support may simply not be enough. The coronavirus pandemic has exacerbated a crisis for Americans already facing poor economic and health outcomes, and highlights the lack of financial services institutions run by Black founders and executives. CDBA members the Harbor Bank of Maryland, OneUnited Bank, and Carver Federal Savings Bank are mentioned.
The Federal Home Loan Bank of Chicago (FHLBank Chicago) this week announced more than $900,000 was awarded through its Community First® Capacity-Building Grant Program to 21 nonprofit community development lenders working in Illinois or Wisconsin. Grants are used to help strengthen a nonprofit community development lender's financial position, operational efficiency, and/or human capital to support the affordable housing and/or economic development programs the organization provides to the local communities in which they, and the member financial institution, serve. Grant recipients include CDBA members First Eagle Bank and Bay Bank.
Democrats in Congress have been calling for legislation to require the Federal Reserve to address racial inequality, but observers say that the central bank already has several regulatory tools at its disposal to tackle the issue. The focus on the Fed's potential role in helping right societal wrongs coincides with concerns about the coronavirus pandemic's devastating impact on minority communities, which have struggled to get access to government rescue programs. While the Fed may be able to utilize a number of policy tools to address racial inequality without Congress's passing new legislation, Ed Mills, a policy analyst at Raymond James, said that the Federal Reserve usually doesn’t act without legal directives.
A startling lack of Black appointees to the highest echelons of U.S. financial regulation has contributed to entrenching institutional racism by ensuring it does not receive sufficient attention. New research from Georgetown Law Professor Chris Brummer highlights the stark lack of minorities, especially Blacks, in leadership roles at major regulatory agencies like the Securities and Exchange Commission and the Federal Reserve. The headline figure is just plain shocking: Just 10 of 327 individuals appointed to senior financial regulatory roles since the New Deal of the 1930s was Black.
The coronavirus pandemic and the heightened attention on race have thrown new light on a longstanding source of economic inequality: Black communities have less access to credit than white ones. To address that gap, Washington and Wall Street are turning to a small network of lenders set up precisely to address that disparity. Community development financial institutions, or CDFIs, are community-based banks, credit unions and investment funds that lend to home buyers, small businesses and others in rural, impoverished and minority communities. Among CDFIs featured is CDBA member Optus Bank in Columbia, South Carolina.