Podcast: Sells, American Banker's Digital Banker of the Year, explains how he encouraged his team to take risks on projects like a three-minute account opening process and a system that analyzes core data in real time to help set deposit prices. Read American Banker's profile on him here.
Foundations and other institutional investors are targeting capital to help hardest-hit communities recover from the coronavirus pandemic, reviving a structure that helped during the Great Recession: community development financial institutions. Unlike traditional banks, CDFIs deploy federal funds that they then leverage four to six times with private debt from banks, foundations, corporations and individuals to lend to disadvantaged business owners, affordable housing developers and community projects that would not otherwise qualify for traditional loans. There are now more than 1,100 CDFIs in the U.S. with more than $222 billion in assets certified by the Department of Treasury's Community Development Financial Institutions Fund program.
Lawmakers are sounding the alarm over complaints from minority-owned and other underserved companies that they are unable access to small-business loans mandated by recent pandemic relief laws. Some independent data backs up their concerns, pointing to minority-owned businesses getting rejected or still waiting for coronavirus rescue funds. And, with the nation intensely focused on racial divisions after the killing of George Floyd, members of Congress from both parties continue to demand better demographic data from the government on recipients of Paycheck Protection Program loans. Fears that minority-owned businesses lack access to loans and a focus on the lack of public data about PPP borrowers are emerging as additional trouble spots for the Small Business Administration program enacted in March in the Coronavirus Aid, Relief, and Economic Security Act.
From Rep. Mike Quigley, Chair of the Financial Services and General Government Subcommittee: Last month, the House passed legislation to provide critical funding to help state and local governments, support our front-line workers in the fight against coronavirus and assist small businesses and workers impacted by the pandemic. However, our work is far from over; we will be dealing with the economic fallout for months, if not years to come. That’s why the $1 billion in the HEROES Act for Community Development Financial Institutions (CDFIs) is key. This funding will not only provide much needed access to capital for struggling rural and urban communities at present, but it will help us lay the path toward economic revitalization in the uncertain times ahead. In addition, it will allow CDFIs to stay afloat while continuing to finance Paycheck Protection Program (PPP) loans.
The Community Development Bankers Association (CDBA) stands in solidarity with black communities in calling for an end to systemic racism and police violence. In response to the national events of the last two weeks, we say black lives absolutely do matter. There is no excuse for racism of any kind.
When the Small Business Administration rolled out its Paycheck Protection Program, it set off a fire drill of sorts among bank technology executives, who had to quickly figure out how to accept applications from borrowers and load them into the SBA's system before the money ran out. Like other banks, the $1.4 billion-asset Sunrise Banks in St. Paul, Minn., had two weeks to decide whether to buy or build a solution, set it up, test it and take it live. As of June 5, Sunrise had made $216 million in paycheck protection loans. What follows is a look at how and why the bank made the technology choices it made and how it plans to use this technology for other purposes when the program ends.
Each year LEDC selects a lender that has shown stellar performance in participating in the Louisiana Small Business Loan Guaranty Program. The Bank of the year recipient exemplifies one of the tenants of LEDC's mission by "Cultivating jobs and economic opportunity through small business, innovation and entrepreneurship." This year's recipient, Bank of St. Francisville, provided access to more than $1.5 million in capital to native small businesses through the Louisiana's small business loan guaranty program.
When does a country reach a tipping point—a point when the citizenry concludes that things are simply spinning out of control, and that something different is required? The question arises, obviously, as protests and looting spread across America in the wake of the brutal police killing of a black man—shocking scenes that have come atop a once-in-a-century pandemic and a Depression-like economic slide. In a moment of crisis, it’s hard to tell when such events will simply fade away in a return to the status quo, and when they will produce lasting change in political and social structures. Yet a look back at recent history suggests that it is precisely at moments like this, when shocks pile on in succession from different directions, that Americans can choose a new course.
Zach Luke of Greenwood's Bank of Commerce has been elected to serve as president of Mississippi Young Bankers, a section of the Mississippi Bankers Association. Mississippi Young Bankers provides leadership development activities and supports financial literacy programs of the MBA and its member banks. Young Bankers members are involved in administering scholarship programs for high school and college students, supporting the MBA Education Foundation and advocating policy positions important to the banking industry. Luke serves as chief financial officer of the Bank of Commerce, where he has been for more than nine years.
Radical change is possible in the banking sector. It's already happened, actually. Over the past 30 years, the U.S. banking sector went from one dominated by small, community banks to one dominated by massive, global banks. Public policy was a major driver of that shift. Some have spent the last decade or longer searching for ways to restore some community-mindedness to the banking sector. We can’t possibly list them all, but here are some of the ones we’ll be watching closely as the COVID-19 pandemic drags out into an economic recession and eventual recovery. Native American Bank is mentioned.