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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.
A new app could help hourly workers that experience significant income swings -- nearly a third of American households. The app, Even, smooths the irregular, up-and-down paychecks of hourly workers into the steady flow of a simulated salary. On good weeks, when users outearn their “average” salary, the company banks the surplus into a separate savings account. When users fall short, they still get their salary, thanks to past surpluses or to interest-free credit from Even. The service charges an annual fee of $156 – which could be preferable to the billions America’s poor spend each year on stopgap measures to smooth their incomes — including $3.4 billion in fees on payday loans alone. Even will be available to all customers by January.
Small banks and credit unions are trying to upend the industry practice in which Visa and MasterCard negotiate settlements with breached merchants and then distribute the proceeds to affected financial institutions. The smaller firms say the process favors big banks. A survey of 535 banks found that nearly three-quarters of banks with assets below $1 billion didn’t receive any reimbursement for breaches between 2009 and 2014, while all banks with assets above $50 billion were reimbursed. Yet fraud is can cost small banks more than $10 to replace a card, compared to $3 for the nation’s biggest banks. A group of small banks has filed a motion in court objecting to terms of a settlement Target reached with MasterCard and are now pursuing additional compensation.
An SBA loan from Durango, Colorado-based First Southwest Bank has helped Colorado Malting Company expand its operation to become the largest craft malt house in the United States. Founders Jason and Wayne Cody say the bank’s work was instrumental in their business’s success. "The first day we were open for business, running a tank that would hold about 400 gallons of wheat, we got an order for 40,000 pounds of malt. So we just kind of went, 'We're going to need some financing help!'” said Jason Cody. “[First SouthWest Bank] has worked tremendously hard and went to bat for us right away trying to figure out how to value malting equipment... I don't know what bank would have been willing to work with us like First SouthWest has."
The FDIC has announced it is accepting applications for the second phase of its Youth Savings Pilot Program, which fosters financial education through safe low cost savings accounts for school aged children. Pilot participants will benefit from the FDIC’s technical assistance and resources for best practices. Participants’ programs will also be featured in an FDIC report on the pilot in the fall of 2016. Any bank is eligible so long as it intends to launch a new youth savings account and financial education program or expand an existing program. Applications for Phase II of the pilot are due by June 18, 2015. Interested applicants should email youthsavingspilot@fdic.gov.
A new report from National Community Investment Fund (NCIF) finds that CDFI banks are substantially more likely than mainstream institutions to provide financial services in underserved areas. The report finds that 53.6 percent of the median CDFI bank’s HMDA loans were made to low income districts, compared to 25.5 percent for the median U.S. bank. In addition, the median CDFI bank had a greater proportion of branches in low income communities — 75 percent, compared to 40 percent for the median U.S. institution. NCIF also surveyed a sample of 24 CDFI banks for more detailed information, including many CDBA members. In addition to developing innovative products to help underserved customers, these banks have created an estimated 10,609 jobs in 2013 alone.