News
Mechanics and Farmers Bank, one of the nation's oldest and largest African-American-owned financial institutions, is rebranding as part of a broader effort to attract a younger and more diverse customer base. The Durham-based bank will now be branded simply as M&F Bank. “We’re trying to attract a younger demographic, a younger customer base,” James H. Sills III, the bank’s president and CEO, said. “Sixty percent of our customers are 60 years old and above... The future for us is the consumer that is 35 to 55... We’re going to be actively seeking diverse clientele. We think that’s the key for this institution... We just can’t rely on the African-American community. We have to go after everybody.”
The CFPB and Department of Justice are taking a renewed interest in redlining, the practice of lenders discriminating against minorities within certain geographic areas. The two agencies have begun to use a more stringent screening methodology than other regulators and have become more aggressive in warning lenders that they are seeing potential instances of redlining. The new methodology examines disparities between peer institutions within groups defined by quantity of Federal Housing Administration lending. The CFPB has not yet taken a public enforcement action solely related to redlining, but has several open investigations of potential redlining. Of the 25 open fair lending investigations opened by Justice by the end of 2014, 10 were being done jointly with the CFPB. Among 18 referrals they received from other agencies during that year, 15 came from the CFPB.
Bank of America and JPMorgan Chase will finally put to rest bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans. The move is a victory for borrowers whose credit reports have been marred as a result of the reported debts, imperiling their job prospects and torpedoing their chances of getting new loans. The change by the banks emerged this week in Federal Bankruptcy Court, where the two banks, along with Citigroup and Synchrony Financial, face lawsuits accusing them of deliberately ignoring bankruptcy discharges to fetch more money when they sell off pools of bad debt to financial firms. Lawyers for Citigroup indicated that they were also considering a similar change.
Virginia Community Capital and The Reinvestment Fund (TRF) have released a new interactive map and two reports that call attention to the gaps in healthy food access in Virginia. The map, built on TRF’s Policy Map platform, combines limited supermarket access data, food insecurity data, food stamp recipient data and population demographics. The first report released alongside the map is a study on limited supermarket access areas across the commonwealth. The report breaks down limited supermarket access areas by the amount of food dollars leaked outside of a given geographic boundary. The second report is a study of supermarkets and their ownership models throughout Virginia.
Registration is open for the CDFI Fund's Expanding CDFI Coverage in Underserved Areas Capacity Building Initiative workshops. This series of two-day workshops will provide specialized training and technical assistance to certified and emerging CDFIs seeking to expand their reach into underserved communities. Opportunity Finance Network (OFN) will partner with subject matter experts including CDBA to provide three workshops relevant to all types of CDFIs. The first session, Forming New and Affiliated CDFI Entities, will be June 16-17, 2015 in Baltimore, Md. The second session, Understanding the Benefits of CDFI Status for Newly-Certified and Prospective CDFIs, will be July 22-23, 2015 in Denver, Colo. The third session, Expansion by Existing CDFIs, will be held August 19-20, 2015, Kansas City, Mo.
Maryland bankers want to coordinate their efforts to help Baltimore businesses return to normal operations after protests that drew national attention to dynamics of inequality in the city. Bank leaders associated with the Maryland Bankers Association are considering making contributions through their foundations and boosting microloan programs. There's also been talk of working with larger economic-development-focused entities like the federal government's CDFI Fund or the Federal Home Loan Bank of Atlanta. "There's the longer-term question around what can be done to help in terms of the underlying challenges," said Maryland Bankers Association CEO Kathleen Murphy. Murphy identified transportation, jobs and education as core challenges facing Baltimore.
More than 26 million consumers are effectively "credit invisible" because they have no credit record and another 19 million are "unscored" because they have an insufficient or stale credit history, according to a CFPB report. The study found that in low-income neighborhoods, almost 30% of consumers were credit invisible while another 15% had records that can't be scored. Those percentages drop to 4% and 5%, respectively, in higher-income neighborhoods. The study also found that black and Hispanic consumers were more likely to fall into the "invisible" and "unscorable" credit records than Whites and Asians. About 15% of blacks and Hispanics had no score compared to 9% of whites. And 13% of Blacks and 12% of Hispanics have unscorable records compared to 7% of white consumers.
The CDFI Fund has opened the FY 2015 application round for the Bank Enterprise Award Program (BEA Program). The BEA Program provides a total of $18 million formula-based grants to FDIC-insured depository institutions that successfully demonstrate an increase in their investments in CDFIs or in their own lending, investing or service activities in distressed communities. Application materials are now available here. Part I of the application must be submitted through Grants.gov by 11:59 p.m. EDT on June 15, 2015. Part II of the application must be submitted through myCDFIFund by 5:00 p.m. EDT on June 17, 2015.
Spring Bank Vice President Brian Blake has been named a Community Bank Hero by The Warren Group and Banking New York magazine. The annual Community Bank Hero award recognizes the leaders and visionaries of the New York Banking industry. Accepting the award, Blake stated that the award reflected the hard work of the entire Spring Bank team. “There should really be 35 names on this award,” Blake said. “In just 7 years, Spring Bank has accomplished so much in pursuit of its mission to serve New York’s underbanked people and businesses. My colleagues and our board have built a bank that truly ‘walks the talk’ when it comes to economic development and financial inclusion.”
In a speech before the Independent Community Bankers of America, Federal Reserve Governor Daniel Tarullo advocated simplifying oversight of community banks that pose little risk to the U.S. financial system. Tarullo said some capital and examination requirements should be eased if the benefits are outweighed by the banks’ cost of compliance. He said the Volcker rule restrictions on proprietary trading and executive pay requirements “present almost prototypical cases in which minimal potential safety and soundness benefits are outweighed by the compliance costs faced by those thousands of banks." Tarullo said the focus for community bank regulation should shift to potential risks that include high-volatility commercial real estate loans and lenders’ reliance on third-party providers.