The CDFI Fund awarded $24.3 million to 27 community development banks through its CDFI Program Awards. These banks will invest the awards in distressed communities to support small business lending and promote affordable housing, neighborhood revitalization, and expansion into new geographic markets. “The CDFI banks recognized today by the Treasury Department are economic engines, working to fight poverty and create opportunity in the places that are struggling with growing income inequality,” said Jeannine Jacokes, Chief Executive Officer of the Community Development Bankers Association. “These banks are part of the solution. We need mission-focused banks like these, and more resources to support the communities."
On September 19, the Treasury Department’s CDFI Fund announced $24.3 million in CDFI Program Awards to a record-breaking 27 banks, including 22 CDBA member banks! Among recipient states, Mississippi received the highest proportion of funds nationwide, with Arkansas ranking second and Louisiana third.
According to a massive new dataset compiled by researchers at the Urban Institute, there are many financially-neglected areas that CDFIs have yet to reach. The study found that CDFIs lent over $34.3 billion between 2011 and 2015, and 64% of this lending went to census tracts with one or more indicators of being underserved or distressed. However, CDFI activity was not distributed equally across the country, even among economically comparable places. In order to expand, the sector needs additional support mechanisms.
Chicago is entrusting $20 million to the last black-owned bank in the city, Illinois Service Federal Savings and Loan Association, thereby bolstering a lender that began in the Great Depression as officials join a nationwide movement to steer idle funds to underserved communities. “If we’re going to be serious about supporting those communities and community banks and what they do for small business, we have to look for opportunities like this,” said city treasurer Kurt Summers.
Bob Jones, president and CEO of United Bank in Atmore, Alabama, has been appointed by President Trump to serve a four-year term as a member of the US Treasury Department’s Community Development Advisory Board as the representative of insured depository institutions. The board advises the director of the CDFI Fund on policies regarding the activities of the fund.
The traditional narrative about banks and FinTech startups is one of rivalry between old and new. However, the teams at FinTech startup LendUp and Beneficial State Bank in Oakland think very differently about the relationship. LendUp CEO Sasha Orloff and Beneficial State Bank Co-CEO Kat Taylor said that banks and FinTechs need each other, and a very large segment of the population living on the margins of financial services in the US need these two groups to work together as well.
The FDIC and two other federal bank regulators have proposed revising certain definitions in Community Reinvestment Act rules to be consistent with new Home Mortgage Disclosure Act requirements. Under the proposal, terms such as “home mortgage loan” and “consumer loan” would be updated.
This week, the Consumer Financial Profection Bureau conducted an official comment period on Section 1071 of the Dodd-Frank Act, which gives federal regulators the authority to collect and disseminate specific information with regard to small business lending from banks and other financial insitutions. As detailed in this Next City article, CDBA "unequivocally supports" the purpose of Section 1071 for its potential to increase financial accountability, but recommends a series of changes and clarifications to reduce the burden of the law's implementation on community development banks.
A growing number of bankers want to partner with the Small Business Administration on disaster relief as rebuilding estimates tied to Hurricane Harvey continue to mount and as Floridians and Georgians assess damage from Irma. The SBA, however, is giving little indication that it would welcome the help. No funds have been set aside to back an indirect program of bank-made, government-guaranteed loans, even though a 2008 law directed the SBA to do just that.
Hurricane Harvey brought the worst rainstorm ever recorded to Houston, but its fast-growing population and booming economy suggest that the city will rebound. Natural disasters bring terrible tragedy, but also unprecedented opportunities to recast urban infrastructure and economies in more resilient, sustainable, and inclusive ways. Houston can use its rebuilding to address the growing gap between rich and poor and bolster its declining middle class.