Recent News
President Obama has released the Administration’s FY 2016 Budget proposal. Included is total funding of $233.5 million for the CDFI Fund, a slight increase from $232 million in FY 2015. Once again, the president’s proposal eliminates funding for the Bank Enterprise Award. However, it includes increases to other CDFI Fund programs: $157.5 million for the CDFI Program, $35 million for the Healthy Food Financing Initiative and $16 million for the Native American CDFI Assistance Program. It also proposes permanently extending the New Markets Tax Credit Program at $5 billion per year, extending... Read more
The CFPB is expected to release rules early this year that will allow it—for the first time—to exercise the authority it was given under the Dodd-Frank Act to regulate payday loans. The CFPB says state laws governing the industry often fall short and that fuller disclosures of the interest and fees may be needed. Although Dodd-Frank bars the CFPB from capping interest rates, the CFPB has a number of options, including deeming industry practices unfair, deceptive or abusive to consumers. The agency is also considering tighter rules to ensure a consumer has the ability to repay. That could... Read more
A report by the Pew Charitable Trusts finds a close relationship between bank overdraft fees and customers closing checking accounts. The report compares the experiences of high frequency overdrafters, who incur more than four debit card overdrafts a year, and those of low-frequency overdrafters, who paid one to three overdraft penalties. High-frequency overdrafters paid an average of $95 in total fees for their last negative balance, nearly twice the $51 low-frequency... Read more
Spring Bank is supporting the growth of small businesses and startups in the Bronx through a partnership with the Business Outreach Center, a CDFI-certified small-business development organization. In the summer of 2014, Spring Bank wrote a letter of credit to help the Business Outreach Center secure the lease for the Bronx Business Incubator, a new space for entrepreneurs to conduct business, engage in workshops and network with peers. “[A] majority of small businesses get their first loans from community banks," said Demetris Giannoulias, founder and chairman of Spring... Read more
A new study by the National Federation of Community Development Credit Unions examines the financial needs of very low income consumers. Many very low income consumers interviewed for the report contrasted the simplicity of dealing in cash to the surprise fees and delayed payments they experienced at financial institutions. They expressed a fear of institutions in general and a general sense that they “didn’t belong there.” The report stresses the importance of relationships and guidance in serving very low income consumers. It also cautioned against product promotion, which is often... Read more
OneUnited Bank and the African American Film Critics Association last week presented “Money on My Mind: Film & TV Industry,” a celebrity panel discussing behind-the-scenes career opportunities in the television and film industry for African-Americans. Panelists at the Los Angeles event also discussed the recent increase in black films that have been both green-lit and experienced box office success. OneUnited Bank hopes the event will advance its goal of building long-term wealth in the black community. “It is amazing how many unsung careers there are in the business... Read more
David Reiling, chairman and CEO of St. Paul-based Sunrise Banks spoke at a roundtable on equity crowdfunding with the Minneapolis/St. Paul Business Journal. "I view [equity crowdfunding] differently than a contrary type of view where this is just a competitor... [T]he fact is that when you look at it from complementary view, these small and medium businesses do not have the same type of access to capital that large ones do. And that’s a glaring need... From a banker’s point of view, you have to take an optimistic view of this and figure out how you can be relevant in this... Read more
A new proposal by the CFPB could allow community banks and credit unions to make "qualified mortgages" more easily. Under current rules, lenders with less than $2 billion in assets and fewer than 500 first-lien loans originations per year can attain QM status if loans are held in portfolio, even if a loan's debt-to-income ratio exceeds QM's normal limit of 43%. The proposal would expand that advantage to more banks by raising the origination limit to 2,000... Read more
Kat Taylor, CEO of Beneficial State Bank, has been selected to become one of six Social Impact Fellows at Berkeley's Haas School of Business. The six fellows will serve as mentors to students, speak on panels, attend special events and provide their expertise to programs, centers and the faculty. "These fellows share one thing in common: they are changing the world with their deep and meaningful work connected to social impact and we are honored to welcome them to Haas,” said Laura Tyson, director of the Institute for Business and Social Impact at Haas. In addition to her... Read more
The CDFI Fund has announced a series of workshops to prepare CDFIs and other prospective program participants for the upcoming CDFI Bond Guarantee Program application round. The workshops will provide details on the program and the various ways to participate, including information on the review and evaluation of applications. The first session, for existing and potential qualified issuers, is scheduled for February 26 at 9:00 AM. The second, for interested program participants and potential eligible CDFI applicants, is scheduled for February 27. Registration is required and will be... Read more
For the first time, the FDIC has publicly released guidelines for how examiners should instruct banks to cut off accounts for risky customers suspected of violating the law, a major point of contention in the controversy over the Justice Department's "Operation Choke Point" probe. FDIC staff are required to use a formal, written process in cases where examiners find banks aren't managing the risks of account activity. All recommendations for termination of deposit accounts must be approved in writing by an FDIC regional director. The guidelines come after months of criticism from... Read more
A new SIGTARP report reveals that private investors like hedge funds and others have stepped in and scooped up about 70% of Treasury's auctioned TARP investments in small banks. As the new owners of the bank’s shares, the funds can profit by reselling them back to the bank at a premium. For instance, one winning bidder won the shares for $3 million less than taxpayers had originally paid. Eight months later, the same bidder sold the shares back to the bank at a $1.6 million profit. Treasury has taken steps to work with community banks to restructure the TARP investments -- including... Read more
The Federal Housing Administration has launched a risk-sharing pilot program designed to encourage CDFIs to finance the rehabilitation of smaller multifamily apartments. Normally, small apartment owners may get a loan from Fannie Mae, Freddie Mac, the U.S. Department of Agriculture or a community bank, but the transactional costs can make the loans expensive. Under the new pilot, FHA and HUD would insure loans offered by CDFIs, lowering the costs for borrowers and encouraging CDFIs to finance more multifamily projects. The lender will share the insurance risk with FHA, covering 50% of any... Read more
Mel Watt, director of the Federal Housing Finance Agency, defended his efforts to expand credit access at a hearing of the House Financial Services Committee. Republican lawmakers objected to the FHFA’s decision to allow the GSEs to guarantee mortgages with as little as a 3 percent downpayment. They also blasted a decision to delay an increase to the fees Fannie and Freddie charge to guarantee mortgages — the increase was designed to reduce the presence of GSEs in the housing market. And they complained about the FHFA’s decision to end a six-year suspension of payments into affordable... Read more
A report by the CFPB delves into peoples' financial lives with a focus on how they understand and achieve financial well-being. The investigation is part of a broader effort on the part of the CFPB to establish best practices for financial literacy training. Using findings from qualitiative interviews, the CFPB found four broad behaviors that contribute to financial well-being: managing money, research/knowledgeseeking, planning/goal-setting, and follow-through. The report concludes that financial literacy programs must seek to go beyond increasing consumers’ knowledge of financial facts,... Read more
The Federal Reserve has released a report and recommendations intended to speed up the US payments system. The proposed changes would move payments to near real-time, a big change from the current ACH system which can take several days. Fed staff said that the Federal Reserve might consider taking a more direct role if the private sector can’t offer the services alone. But the report is also careful to stress that any Fed action would be closely coordinated with big banks, which... Read more
Melanie Stern, Spring Bank's Director of Community Lending, appeared on radio show Gotham Connections to discuss Spring Bank's new Borrow and Save program: "Borrow and Save takes the traditional payday model and turns it on its head... It's a small amount of credit up to $1,500 that has a unique twist--that 25% of the loan is kept in a savings account. The goal there is to help people build savings, give people an opportunity to build their credit profile and also to break the habit of repeat lending... On the consumer side, to date, we've had to write off one loan in the... Read more
Chicago-based CDFI Bank Seaway Bank & Trust has been slapped with a consent order by the FDIC and the Illinois Division of Banking. The order requires the bank to hold elevated capital levels, strengthen management, halt dividend payments to investors and beef up controls to detect money-laundering and other criminal activity by customers. The order, which the bank consented to without admitting or denying charges of unsafe or unsound banking practices, requires Seaway to boost its “Tier 1” capital to 8 percent of its assets within 60 days. The bank would need to raise nearly $8... Read more
Virginia Community Capital made significant advancements in its impact lending goals, providing over $259 million in financing for 407 community impact projects across Virginia as of December 2014. The company has financed eight healthcare centers, supported 3,367 jobs and funded nearly 5,000 affordable housing units. Recently, VCC provided a gap construction loan to the Park Brothers to build Round Hill Meadows, a 120 unit mixed-income neighborhood consisting of 60 market rate and 60 affordable apartment homes. The affordable apartments will be critical in the town of... Read more
Beneficial State Bank is planning construction of a new 11-story mixed-use building built with both environment and community in mind. The building will contain branches of both Beneficial State Bank and Albina Community Bank. The proposal will also provide space for B-corps—socially responsible companies that pursue social mission alongside profit. Many of the units would be set aside as affordable housing. "Our mission would be to have a high proportion for the housing be affordable, if not all of it," said Beneficial State CEO Kat Taylor. "We're still... Read more