Recent News
A new white paper by the National Federation of Community Development Credit Unions compares CDFI certified credit unions to mainstream credit unions. The paper finds that on average, CDFI credit unions outstrip their mainstream peers in financial growth and performance even though more of their loans and services are located in disadvantaged communities. CDFI credit unions are also more likely than mainstream peers to offer tech services. The report notes that the CDFI credit union sector has the potential to expand significantly: nearly half of all credit unions are concentrated in... Read more
Programmer Patrick McConlogue stirred controversy last summer by staging a social experiment in which he offered to teach a homeless man, Leo Grand, to code. McConlogue believed the skill would enable Grand to escape homelessness. Grand eventually released an app called Trees For Cars which generated 15,000 downloads and a $10,000 profit. But Grand is unbanked and that money now sits unused in McConlogue's bank account. McConlogue has encouraged Grand to open an account to make the transfer, but Grand refuses. Mitchell Netburn, president and CEO of Project Renewal, says it's not uncommon... Read more
Preston Pinkett III has been appointed chairman of City National Bancshares Corp. Mr. Pinkett succeeds Eugene Giscombe, who been appointed chairman emeritus. Mr. Giscombe will remain on the board as a director. “We are very pleased with this transition," said City National Director Alfonso Carney. "Mr. Giscombe provided a level of leadership and guidance that helped the bank grow and expand into new markets. We believe now is the perfect time for Mr. Pinkett to add the role of chairman to his responsibilities of CEO. As a proven business leader, Mr. Pinkett set in motion... Read more
New lending from Bank2 has allowed the Housing Authority of the Cherokee Nation to finance an ambitious affordable housing project. The project makes use of HUD's Section 184 Indian Home Loan Guarantee Program, which will provide a 100% guarantee on the loans. The Housing Authority of Cherokee Nation has closed on six loans with Bank2 so far, which will replenish the housing authority's revolving construction fund as more homes are built. “We are very excited to be working with the Cherokee Nation on their initiative to build homes for their citizens throughout the tribe’s... Read more
The Consumer Financial Protection Bureau has issued a report highlighting illegal actions by payday lenders, debt collection companies and consumer reporting agencies. CFPB examiners found instances of payday lenders deceiving consumers and illegally harassing borrowers to collect debts. The report also criticized debt collection agencies often used by those lenders, claiming the agencies misled consumers about litigation, made excessive calls to consumers and failed to investigate credit... Read more
Panelists offer perspectives on the legacy of the bank bailout. Lee Sachs, former counselor to the Secretary of the Treasury, argues that the bailout was a success; higher capital requirements and new regulations have led to a substantially safer financial system. Other panelists critique that view, arguing that Treasury missed an opportunity to force the big banks to downsize to smaller, safer institutions. Several panelists argue that the bailout failed altogether in its primary mission of preventing another financial crisis by focusing too narrowly on banks while failing to reform... Read more
An FDIC report has found that rural community banks located in depopulating areas are coping with a shrinking pool of customers better than expected. Rural counties that experienced outflows lost 14.8 percent of their population on average. But community banks in those areas actually fared better, on average, than banks in metro areas. Unusually strong performance in the agricultural sector beginning in 2006 resulted in community banks in depopulating rural areas posting higher asset growth rates than community banks elsewhere from 2006 through 2012. Asset growth was accompanied by strong... Read more
A recent spate of lawsuits accuse 10 banks and a credit union of helping online payday lenders break usury laws by processing debt collection transactions. Payday lenders depend on those transfers, which are more reliable than debit and check transactions. The financial institutions are accused of violating federal anti-racketeering laws, federal banking regulations and industry standards and rules established by NACHA. The plaintiffs argue that the banks should have known that their customers were acting illegally and thus were helping them break the law. Targeted financial institutions... Read more
The CDFI Fund is holding an application webinar on the 2014 CDFI Bond Guarantee Program application today at 2:30 PM. The webinar will touch on a variety of topics, including the application review process, application evaluation criteria, bond proceed use restrictions, program costs and reporting requirements. In addition, CDFI Fund staff will discuss the upcoming outreach sessions being held across the country for the CDFI Bond Guarantee Program, as well as the... Read more
Debra McGee, a senior vice president and director of minority business development for BankPlus, discusses her career and the bank's work in Mississippi: "When we decided to build a BankPlus branch near Jackson State [University], some individuals thought we were crazy. Of course, BankPlus had a special vision to serve this community... We invested more than $3 million in this venture. We are proud of what we created in Jackson and making a difference in the community and our state... One of the services or products I helped create is CreditPlus, a program to help... Read more
At a summit on small business credit innovations held at the Federal Reserve Bank of New York earlier this month, executives from high-cost alternative lenders responded to criticism of their business loan pricing. Asked whether their average loan's 54% APR was fair, Andrea Gellert of alternative lender OnDeck responded that, “APRs somewhat distort the true economic costs and the cost-return relationship on the loan. If I buy that inventory for a dollar and sell that inventory for $2 in a six-month period, that’s a 200 percent return. So my 54 percent cost makes absolute sense.” Industry... Read more
OneUnited Bank is piloting revamped branches featuring roaming staffers armed with iPads loaded with real-time information about their walk-in customers. Staffers can see the customers' recent calls, open loan referrals and recent transactions. That information allows the bank's sales representatives to quickly identify each person's financial needs and to make relevant suggestions. The new branch model employs the recently introduced Salesforce 1 for Financial Services customer relationship management software. OneUnited Bank introduced the software late last year to... Read more
The Senate Banking Committee has approved a White House-supported bipartisan measure to overhaul Fannie Mae and Freddie Mac on a 13-9 vote. But analysts say that is short of the majority needed to compel Senate Majority Leader Harry Reid (D-Nev.) to bring the bill up for a floor vote. It is an open question whether the Johnson-Crapo bill will become the base from which legislative efforts resume in the next Congress, or if Sens. Brown, Schumer or Shelby will seek to start anew. Liberal lawmakers have felt less urgency to advance an overhaul given the new direction towards maintaining the... Read more
Southern Bancorp is rolling out a new quarterly publication, Mission News, which reports on the bank's community impact. In this issue: How Southern Bancorp helped the Clarksdale, Miss. Municipal School District become one of five districts nationwide selected for a $10 million U.S. Department of Education Race to the Top grant; the revitalization and entrepreneurship initiatives enacted by Southern Bancorp and the U.S. Department of Housing and Urban Development in Helena, Ark.; and a financing effort that helped a local coffee shop expand while giving new life to a... Read more
The CDFI Fund has released a new list of certified CDFIs showing a substantial increase in the size of the CDFI banking sector. The new list counts a total of 96 CDFI banks, up from 77 at the end of 2013 -- an increase of almost 25%. In a single month, between March and April 2014, the number of CDFI banks increased by 13 institutions. The total number of certified bank holding companies is now 57, an increase of 6 since March. To see the new list of certified CDFIs in excel format, click here.
Melvin L. Watt, the new director of the Federal Housing Finance Agency, has announced a significant shift in strategy for Fannie Mae and Freddie Mac which will preserve their role in mortgage financing rather than roll it back. Under Watt's policy, Fannie and Freddie will keep the current limits on the size of loans they guarantee rather than reducing them as previously proposed. The director also loosened rules obligating banks to “buy back” distressed loans. The mortgage financiers will now allow two delinquent payments in the first 36 months after their acquisition of a loan and... Read more
An analysis of federal filings has found that the five banks with the most branches in Wal-Mart stores ranked among the top 10 U.S. banks in fee income as a percentage of deposits. Among the 6,766 banks included in the study, just 15 had fee income higher than loan income—including the five top banks operating at Wal-Mart. The high fee income results from the increasingly common practice of customers intentionally overdrawing their accounts, choosing to incur the fees for quick cash. "It's cheaper than a payday loan," said Anna Proctor, a Walmart customer who often overdrafts. If her... Read more
Six Democrats whose support is crucial to passing the Johnson-Crapo Freddie and Fannie reform bill agreed not to vote for the proposal in a private meeting. The senators were concerned that the structure of the re-insurer intended to replace Fannie and Freddie would be unworkable and that the bill lacked sufficient support for affordable housing goals. Senate Banking Committee Chairman Tim Johnson (D-S.D) and Senator Mike Crapo (R- Idaho) still have the backing of six Democrats and six Republicans on the 22-member committee. However, Senate Majority Leader Harry Reid (D-Nev.) has said the... Read more
The CDFI Fund has opened the application period for the CDFI Bond Guarantee Program. The program is intended to support CDFI lending and investment by providing a source of long-term, patient capital to CDFIs. Up to $750 million in total bond guarantee authority is available in this round. The minimum guarantee size is $100 million. Application materials are available on the CDFI Fund’s website. Qualified Issuer applications must be submitted by June 23, 2014. Guarantee applications must be submitted by June 30,... Read more
U.S. Federal Reserve Governor Daniel Tarullo has called on regulators to revamp a variety of new bank rules, including carving out exemptions for mid-sized banks. Tarullo said regulators should amend their rules to explicitly exempt community banks from the Volcker rule. He also criticized the regulatory approach of Basel III, which allows banks to judge the riskiness of their assets. Tarullo advocated instead for the stress-testing approach administered by the Fed, although he expressed concerns that Dodd-Frank's mandates are needlessly subjecting midsize, low-risk banks to those exams.... Read more