Recent News
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... Read more
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... Read more
Three Senate Democrats are calling for an inquiry into reports that officials at the Office of the Comptroller of the Currency halted at least a half-dozen investigations related to racial discrimination and redlining. “Recent reports indicate that senior OCC officials have abdicated their responsibilities — allowing banks to continue business as usual despite alleged violations of [Equal Credit Opportunity Act] and [Fair Housing Act],” the senators wrote to the acting Treasury Department inspector general on Thursday. The senators’ letter followed a July 13 ProPublica report... Read more
U.S. Bancorp Community Development Corporation (USBCDC) today announced $1.15 million in grants to more than a dozen Black-led Community Development Financial Institution (CDFI) partners and – in partnership with the U.S. Bank Foundation – a grant to the African American Alliance of CDFI CEOs. This is part of U.S. Bank's overall $116 million commitment to addressing social and economic inequities. A total of 15 CDFIs will receive grants ranging from $50,000 to $100,000. Among the banks receiving grants are CDBA members Carver State Bank, City First Bank of DC, The Harbor Bank of... Read more
When the U.S. Small Business Administration rolled out the Paycheck Protection Program (PPP) in response to the economic toll of the coronavirus pandemic, Bank of St. Francisville helped administer funding to support a total of 197 small businesses, which helped 1,469 employees keep their jobs. The bank asked the owners of those businesses to share feedback on their experience working with Bank of St. Francisville.
Businesses owned by Black people were hit especially hard by the coronavirus pandemic because of a combination of geography, limited reach of a key federal aid program and weaker ties to banks, a new report from the Federal Reserve Bank of New York finds. This report offers “some pretty compelling evidence about the coincidence of the health crisis and business crisis in places that have high concentrations of Black businesses and Black residents,” said Claire Kramer Mills, assistant vice president at the New York Fed. “To have the greatest impact, the next round of Covid-19 relief should... Read more
Black banks support Black communities, lending mostly to Black homebuyers and maintaining community lending even in tough economic times. Recent interest in supporting these institutions is a welcome and positive step. But their small sizes and declining numbers mean that today, they cannot tackle the problem of capital access in predominantly Black neighborhoods by themselves. To bring greater capital to communities of color, our recent study on the benefits and limits of Black banks suggests a two-pronged approach: increase capital to Black banks, and adopt policies that support... Read more
Morgan Stanley announced $14.6 million to support long-time partner Carver Bancorp, Inc., one of the nation's largest Minority Depository Institutions (MDI). Morgan Stanley's grant enabled Carver to buy back shares and bolster its capital position to help weather the economic impact of COVID-19 in the wake of the pandemic. In addition, the grant will help the bank assist small businesses and customers that were affected by COVID-19, particularly those that did not receive federal relief loans. Previous commitments Morgan Stanley has made include $10 million in grants to... Read more
The Community Development Bankers Association and Inclusiv, the national trade associations for the CDFI bank and credit union sectors, respectively, sent a letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs last week signalling their strong support for the Jobs and Neighborhood Investment Act (S. 4255). The bill redirects $17.9 billion of $500 billion in funding already appropriated by Congress under the CARES Act for the U.S. Treasury to support emergency economic relief to CDFIs and MDIs.
First Federal Bank of Wisconsin plans to purchase Mitchell Bank. FFBW Inc., is the Brookfield-based parent company of First Federal. In an announcement this week, the bank said it entered an agreement to buy in cash the assets and assume the liabilities of Mitchell Bank. The purchase price is expected to range from $4.7 million to $4.9 million, a regulatory filing shows. According to the announcement, First Federal will take over about $44 million in customer deposits and $17 million in loans from Milwaukee-based Mitchell. As of March 31, First Federal held $278 million in total assets.... Read more
Quontic, the adaptive digital bank, is proud to announce the re-launch of its non-qualied mortgage products (non-QM) for one-to-four family owner-occupied home loans, along with non-QM loans for one-to-four family investors using a non-traditional debt service coverage ratio (DSCR). Quontic's unique non-QM loans are immediately available through its Wholesale Lending Division. The COVID crisis has required that most non-QM lenders pull out of the market due to liquidity constraints, capital losses or other reasons with little hope of reentry. While Quontic paused non-QM activity to assess... Read more
"The more you [run a community bank in the Bronx] the more you see the lack of inclusion is baked into stuff," says Demetris Giannoulias, the Chicago-born co-founder and CEO of Spring Bank. Reports submitted to federal regulators show Spring Bank's borrowers, both individuals and businesses, are disproportionately located in low-to-moderate income census tracts. All of its small business lending in 2016 and 2017 went to businesses with less than $1 million in revenue. Yet it is financially sustainable — if it wasn't, like any bank it would get in trouble with regulators.
Congress created the Paycheck Protection Program with good intentions: help small businesses both to survive and avoid laying off their employees. Giving out over $500 billion certainly helped, but PPP has run its course. Rather than applying for the $130 billion still available, millions of small businesses will close down. Small businesses and workers still need help, but we need a better way to provide it. Fortunately, there are bipartisan proposals already in Congress to do that.
What role should banks play to build post-pandemic resilience? Banks were the problem in 2008. In 2020 they could speed the path to recovery, for example, by helping small businesses weather shelter-in-place orders. The banking industry has an opportunity to make good on its promise to communities as an essential service to be protected. But it takes all of us who work at banks, advocates who challenge the status quo, and customers who expect nothing less than equitable committed service.
The U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund has awarded $265 million to five CDFI banks and their affiliated entities, all of which are CDBA members. The CDFI bank awards are as follows: $50 million to Carver Financial Corporation, affiliated with Carver State Bank of Savannah, GA; $50 million to Harbor Bankshares Corporation, affiliated with The Harbor Bank of Maryland in Baltimore, MD; $50 million to SB New Markets CDE, LLC, affiliated with Sunrise Banks of Saint Paul, MN; $50 million to Southern Bancorp of Arkadelphia, AK; $65 million... Read more
The Small Business Administration (SBA) released details about Paycheck Protection Program (PPP) loans. The data doesn't cover all PPP loans—just those over $150,000. That still includes more than 660,000 loans valued at more than $429 billion,* about 84% of the $510 billion in PPP loans that have been issued. The data begs three questions: 1) Who got what? 2) Where did they get it from? and 3) How well did the loans perform? To put it mildly, the veracity of the PPP loan data set is questionable.
Calls for swift action to end systemic racism have gotten louder in the seven weeks since the death of George Floyd, and expectations have mounted for banks to play a major role — especially when it comes to closing the income gap between whites and Blacks. At National Cooperative Bank in Arlington, Va., a focus on hiring and promoting more minorities ramped up in February 2019 when the $2.7 billion-asset bank began a series of discussions and exercises on unconscious bias. John Holdsclaw IV, executive vice president of strategic initiatives, said the bank, which was created by... Read more
The Office of the Comptroller of the Currency announced the launch of Project REACh to promote financial inclusion through greater access to credit and capital. REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy. Participants in the inaugural meeting included Brian Argrett of City First Bank of DC and Wayne Bradshaw of Broadway Federal Bank.
NCRC has recommended an approach that will make CRA ratings more rigorous. This white paper describes NCRC's suggested rating system and discusses our forecasts of increased dollars for LMI neighborhoods. The paper focused on community development (CD) financing. CD financing targets affordable housing, economic development projects and community facilities in LMI neighborhoods. NCRC suspects that the agencies have been lax in their examination of CD financing.