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.
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.
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.
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 that OCC staff over the last three years discovered at least six banks, including Bank of America and Cadence Bancorp, were allegedly engaged in discriminatory lending, but failed to reprimand or penalize the institutions.
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 Maryland, and Southern Bancorp
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.