Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
CFPB director Richard Cordray signaled a more comprehensive approach to regulating bank operations at a forum on access to checking accounts earlier this month. Cordray focused on how financial institutions may use specialty credit scores to bar risky customers from opening accounts, or to target customers who are most likely to use overdraft protection as a credit product. Cordray criticized specialty consumer reporting agencies, which collect databases of “derogatory” information on customers, including how many times a consumer overdrew their account. Although the CFPB has raised these concerns individually in the past, the speech marks the first time the regulator has taken a system-wide dive into how banks operate rather than as part of remarks on the underbanked or underserved.
Virginia Community Capital, parent of Community Capital Bank of Virginia, is an organization with an uncommon history and exceptional impact. Their story starts in 2005, when Governor Mark Warner (D-Va.) proposed a measure to send more capital to distressed areas of Virginia by granting $15 million in housing and small business loan fund assets to a CDFI. Today, projects completed with VCC loans have created 2,066 jobs and retained 1,098 jobs; created or preserved 4,824 affordable housing units; and built or improved 1.9 million square feet of commercial space. “We’re testing out a new capital model that says you can do business and you can do good,” said VCC CEO and CDBA Chair Jane Henderson.
Industrial Bank will be recognized for its significant contributions to the Washington D.C. community at the annual D.C. Chamber of Commerce Awards Gala. The Chamber praised Industrial Bank as a family success story, with leadership that has sustained success for both the bank and its city. “This award is presented to an individual or company that has contributed significantly to the progress and advancement of the District of Columbia, and Industrial Bank has done that and more,” said Barbara B. Lang, D.C. Chamber president and CEO. “It is businesses like Industrial Bank that allow our community to evolve economically for generations.” Entertainment at the event will be provided by funk sensation George Clinton.
American Banker Magazine has included BankPlus in its annual list of Best Banks to Work For, highlighting the bank's commitment to the health of its employees. Working with the University of Mississippi Medical Center, the bank has created a telehealth option in which employees can use an office webcam to see doctors for minor ailments. Visits, as well as certain prescriptions, will be free for employees. BankPlus also offers perks like filtered water, scales and premium insurance discounts to employees who pursue wellness. "Hopefully, next year at this time we will have some very impressive numbers," said Dianne Pepper, the bank's human resources director.
CDBA has submitted a comment letter to the CDFI Fund urging a new Capacity Building Initiative on social impact measurement. In the letter, CDBA called attention to the lack of standardization and the absence of an industry wide best practices repository, which both have hampered attempts to develop robust social impact metrics. CDBA recommended addressing these issues by structuring the initiative around two goals: determining the types of impact metrics that are appropriate to collect and promoting cross-industry information sharing. CDBA also recommended the CDFI Fund provide financial and technical support to help defray the costs associated with implementing social impact metrics.
Republicans have won majority control of the Senate, triggering a change of leadership in Senate committees which will once again put Richard Shelby (R-Ala.) at the helm of the Senate Banking Committee. Shelby is a staunch opponent of the Dodd-Frank act whose record is generally friendly to banks and Wall Street. But he has also pushed back on the banking industry, criticizing Wall Street for its role in the financial crisis. He also opposed the repeal of the Glass-Steagall provision, a firewall between investment and commercial banking. Shelby will likely focus on issues with bipartisan support to minimize risk of filibuster and presidential veto. Among his likely goals are eliminating the director’s job at the CFPB and requiring more disclosure by the Financial Stability Oversight Council.
A new study finds that Millennials are interested in local banking and would prefer to bank with locally owned and operated community institutions. The study found that 46 percent of Millennials feel banking with a locally owned banking institution is important. Of the age groups surveyed, Millennials were the most entrepreneurial, with 41 percent of saying they are very interested in starting up their own business, compared with 34 percent of Gen Xers and 17 percent of Boomers. Over 60 percent of Millennials who intend to start their own business hope to do so within the next two years.
Kat Taylor of Beneficial State Bank spoke earlier this week at a networking event that connected startups, social entrepreneurs and nonprofits with impact lenders. The event was hosted by Hatch, a social incubator in Portland, Oregon. The program offers lenders an opportunity to learn about the needs of prospective clients and gives participants a chance to meet socially-minded financiers. Taylor said the lenders share a mission to build nurturing economies as much as business. In addition to Beneficial State Bank, lenders present included Albina Community Bank, Craft3, Hatch, Kiva Zip, Mercy Corps, the Portland Development Commission and the Oregon Association of Minority Entrepreneurs.
Melvin Watt, Federal Housing Finance Agency chief, has announced a program offering more reassurances to mortgage banks that fear they could suffer unpredictable losses on the loans they sell to the government. The housing finance agency intends to relax the agreements that determine when Fannie and Freddie may require banks to buy back bad loans. Under the new program, the agencies would only demand buybacks when there is a pattern of misrepresentations and inaccuracies in the loans. The move is intended to reassure banks that have had to pay tens of billions of dollars to settle legal cases arising from the housing boom and bust and buy back bad loans sold to Fannie and Freddie.
The Boston Fed discussed new approaches to income inequality at a conference earlier this week. At the event, Federal Reserve Chair Janet Yellen expressed concern about the rapidly increasing wealth of the richest Americans at a time when living standards for most Americans remained stagnant. Eric Rosengren, the Boston Fed president, discussed its Working Cities Challenge program, which challenged officials, nonprofits and business leaders in Massachusetts cities to collaborate on three-year plans to help transform their neighborhoods. The conference focused on the systemic causes of inequality, tracing the effects of educational disparities, declining civic collaboration and racial bias.