Even as Covid-19 cases surge world-wide, the arrival of viable vaccines holds the promise of a return to something resembling normality by the middle of next year. But the commercial real-estate sector may never get back to normal, and that could spell trouble for banks. Many banks are concentrated in and dependent on commercial property lending. Bankshold half of all commercial real-estate loans. The 5,000 or so U.S. community banks, withabout a third of total assets, are two to three times as concentrated in commercial real-estate lending as the approximately 30 larger banks. Problems in commercial real estate can hurt banks in two ways. Losses on existing loanscan damage earnings directly, and a correction can reduce future lending volumes,impairing an important driver of earnings. Based on what we know now, things don’t look good.

Darrin Williams, a former lawyer, rose from relative obscurity when he was tapped to be a member of President Trump's Great American Economic Revival initiative, which also included Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., and David Solomon, chairman and CEO of Goldman Sachs Group Inc. Their conversations with Trump and Secretary of the Treasury Steven Mnuchin ultimately led the Small Business Administration, which administered the $350 billion program, to earmark the money for so-called CDFIs. Southern Bancorp is one of the largest of about 1,100 such institutions, which the Clinton administration chartered to invest in the poorest U.S. communities. This summer, Williams’s bank wrote $111 million in PPP loans and gave away $125,000 to small businesses in the most Covid-devastated places in the Mississippi Delta.

A half-century ago, the federal government set out to attack the racial wealth gap by supporting Black-owned banks. Policy makers hoped the banks would lend to Black communities sidelined by the mainstream financial system. But five decades of federal financial and regulatory support have failed to boost America's Black-owned banks. The majority have disappeared under the burden of soured loans, bigger competitors created by mergers and financial downturns that hit small lenders hard. Fifteen years ago America had 36 Black-owned banks, government data show. Now there are 18. Now a new generation of entrepreneurs, companies and regulators is trying a different strategy. They are promising to strengthen Black-owned banks by building up their capital with private investments and giving them new ways to earn money with hundreds of millions in big corporate deposits. Their hope is that this approach will ultimately improve Black communities’ access to capital. CDBA Members Optus Bank, Broadway Federal Bank, and City First Bank of DC are featured in the article. 

The Federal Reserve is lowering the minimum loan size for its middle-market business rescue program by more than half to make the program more available to smaller businesses. The central bank said Friday that small businesses seeking credit from the Main Street Lending Program can access loans as small as $100,000, down from the previous cutoff of $250,000, and that fees will be adjusted accordingly. The $600 billion program, which is funded by the Fed and the Treasury Department through the Coronavirus Aid, Relief and Economic Security Act, is available to businesses with fewer than 15,000 employees or less than $5 billion in annual revenue.