Graham Steele, Assistant Secretary for Financial Institutions
"Over the past few years, the field of community finance has been transformed both by the historic scale of federal investments and policies focused on supporting equitable economic growth. During the Biden-Harris Administration, the Treasury Department has focused on unlocking the economic potential of financially underserved communities across the country. Secretary Yellen has outlined an economic strategy called 'modern supply-side economics,' which calls for, among other actions, boosting economic productivity by addressing inequality and making investments in people, places, and infrastructure that have been constrained by a lack of resources and opportunity.
Treasury's community finance programs have played an important role in this overarching strategy, and we are seeing results in financially underserved communities across the country, from increases in lending in the most economically disadvantaged areas to new clean-energy investments in low-income communities. In December 2022, I provided an overview of Treasury's approach to community finance policy. I am now pleased to provide an update on how Treasury's community finance related efforts are supporting underserved communities throughout the country..."
"Today, the Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), and Ranking Member Maxine Waters (CA-43) announced the formation of the Committee's bipartisan Working Group on Artificial Intelligence (AI), led by Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill (AR-02) and Subcommittee Ranking Member Stephen F. Lynch (MA-08).
The bipartisan AI Working Group will explore how artificial intelligence (AI) is impacting the financial services and housing industries, including the development of new products and services, fraud prevention, compliance efficiency, and the enhancement of supervisory and regulatory tools, as well as how AI may impact the financial services workforce. The Working Group will also examine how existing regulation addresses the use of AI and how lawmakers can ensure that any new regulations consider both the potential benefits and risks associated with AI. This Working Group is a continuation of the work conducted by the Task Force on Artificial Intelligence in the 116th and 117th Congresses."
"The Senate failed to override President Biden's veto of a resolution to nullify the Consumer Financial Protection Bureau's small-business data collection rule.
The Senate on Wednesday voted 54-45, falling short of the two-thirds majority needed to override the president's veto last month of a Republican-led resolution to gut the small-business data collection rule under the Congressional Review Act."
"As part of our mission to make the U.S. economy stronger and the financial system more stable for all segments of society, the New York Fed issues periodic reports on credit access for low-income Americans in a series called 'The State of Low-Income America.'
The 2024 report, 'The State of Low-Income America: Credit Access & Housing,' examines low-income households' access to credit, ability to repay loans, and use of mortgage refinancing through Q3 of 2023."
"The federal bank regulatory agencies today jointly issued a overview webinar on the final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA).
The nearly one-hour video provides an overview of the new CRA rule issued on October 24, 2023, and its objectives. Additional topics in the recording include assessment areas, community development, evaluation framework, performance tests, ratings, data collection and reporting, and applicability dates.
The CRA is a landmark law enacted nearly 50 years ago to encourage banks to help meet the credit needs of their local communities, with a focus on low- and moderate-income neighborhoods, in a safe and sound manner."
"Two years ago, when billions of dollars of equity capital from the U.S. government were awarded to minority banks and community development financial institutions, there was widespread hope that the funding would propel growth at those institutions and eventually help close the racial wealth gap.
Combined with equity investments from the country's largest banks, the massive injection of capital into dozens of minority depository institutions in particular — which have long struggled to build capital with the same success as non-minority banks — was hailed as transformational.
But a combination of higher interest rates, higher deposit costs and post-banking crisis concerns about the safety and soundness of the nation's smaller financial institutions has put a significant damper on some minority banks' ability to attract and retain deposits. And without more deposits, some bankers say they cannot fully leverage the equity capital they have received."
"A more robust secondary market for loans originated by Community Development Financial Institutions (CDFIs), which specialize in lending to low- and moderate-income communities, would give CDFIs greater access to capital, thus allowing them to make more loans. This is why the Community Development team at the New York Fed is researching the secondary market for loans originated by CDFIs and how that market could be expanded."
The OCC has issued a new set of FAQs related to SSBCI 2.0.
"These FAQs address the following topics:
- Reporting on loans to businesses owned by socially and economically disadvantaged individuals.
- Regulatory treatment for loans using certain SSBCI-supported credit enhancements.
- Considerations for loans in Indian Country.
- Community Reinvestment Act considerations."
"Another high-profile departure from the House Financial Services Committee underscores the fading power of first-hand banking expertise in Congress.
There's a dwindling number of bankers in Congress, a trend that could hurt policymaking on banking-focused committees, experts said. The upcoming retirement of Rep. Blaine Luetkemeyer, a former community banker in Missouri, leaves few senior Republicans with direct experience in the industry in high-profile positions on any banking-related committees in the House or Senate."
Southern Bancorp in Little Rock, Arkansas, is among the biggest beneficiaries of the $8.7 billion Emergency Capital Investment Program the Treasury Department unveiled two years ago. Now, CEO Darrin Williams says he's busy putting the $250 million in low-cost equity capital his community bank received to work.
The process has run him a little ragged, Williams admitted in a recent interview.
"We have opportunity frustration," Williams said. "There are so many opportunities. Part of my role here is to really crystallize and focus on those that will have the deepest impact on people and this organization. … I'm staying up nights trying to figure out how to make this all work."
To be sure, an overabundance of capital isn't a bad problem for a bank to have, especially a $2.6 billion-asset community development financial institution that struggled to raise it in the past. Between 2017 and 2021, Williams conducted a campaign that raised $50 million — a fifth of what the Treasury Department invested in Southern in July 2022.
The bank's plans for deploying the ECIP cash include a major investment in home lending, boosts to consumer and Small Business Administration lending, as well as pursuit of mergers and acquisitions. The ultimate aim is to double Southern's size over five years — the idea being a bigger bank can do more to help disadvantaged communities.