Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
"The rule will be implemented in phases, with larger providers subject to the rule sooner than smaller ones. Financial firms will be required to comply based on their size; the largest institutions will have to comply by April 1, 2026, while the smallest covered institutions will have until April 1, 2030. Certain small banks and credit unions (those with assets below $850 million) are not subject to the rule."
"Bankers also are concerned that fintechs will use venture capital funding to subsidize lower rates on loans and other products while sending marketing blitzes to steal customers from big banks. Fintechs promise a wide range of financial benefits to low- and moderate-income consumers that bankers say may or may not be real . . . The rule will initially impact the largest banks that for now have just six months to comply. The timeline of staggered four-year compliance dates depending on a bank's size could change in the final rule, some experts say."
"In Congress' last action before Election Day, the Senate cleared a stopgap funding bill Wednesday night that heads off a government shutdown next week, bucking the demands of former President Donald Trump.
President Joe Biden is expected to quickly sign the measure, preventing a funding lapse Tuesday and delaying the government shutdown deadline to Dec. 20. It also punts a potentially bitter funding fight to just before Christmas, with the results hinging on the November elections and which party wins control of the House, Senate and White House."
- Final guidance maintains enhanced scrutiny for:
- Transactions involving nonbanks.
- Pro forma institutions with over $100 billion in assets.
- Institutions with adverse Community Reinvestment Act (CRA) ratings.
- Changes from the proposal include:
- Removal of a statement under the financial resources factor to prevent misinterpretation that a strong IDI would be unable to absorb a weaker one.
- New language clarifying that a merger must reduce financial risk to receive a favorable assessment.
- Slight modifications were made to the convenience and needs factor:
- The final guidance emphasizes that a merger should enable the resulting IDI to better serve the community.
- Clarification on public statements about withdrawn applications:
- FDIC Board retains the discretion to issue public statements on withdrawn applications to promote transparency, but such statements are rare and will comply with confidentiality laws.
- Opposition from FDIC Board members:
- Vice Chairman Travis Hill and Director Jonathan McKernan voted against the final policy, with Hill expressing concerns that the proposal went in the wrong direction.
"The industry lawsuit will block what regulators call a necessary update to the rules governing the 1977 law, Sen. Elizabeth Warren (D-Mass.) and Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, said in a Sunday letter to the Chamber and the ABA. The law measures banks' lending and investments into low- to moderate-income communities based on branch locations.
The shift to online banking has made a reliance on branch networks for CRA evaluations outdated, Warren and Waters said.
'These rules must be updated, and your efforts to stop regulators from doing so is unjustified and harmful,' the two lawmakers said in their letter, obtained by Bloomberg Law."
"State Street Corporation (NYSE: STT) today announced that it has placed an additional round of deposits through two minority depository institutions (MDIs) and Community Development Financial Institutions (CDFIs), Massachusetts-based Leader Bank and Oklahoma-based Local Bank. These placements are the latest installment of the firm's $100 million program that launched earlier this year to facilitate low-cost, stable deposit funding to the communities it serves, and 75% of the funds have been placed."
"Leroy Abrahams, head of Community Engagement at Regions, welcomed the attendees of the third annual Regions Bank CDFI Convening by outlining shared priorities for the leaders in the room. . . .
John Olaimey, President and CEO of Southern Bancorp Bank, led a discussion about the history and primary objectives of CDFIs and how their corporate organizational structure allows them to effectively serve their communities. Olaimey recounted that Southern Bancorp was one of the first CDFIs in existence and talked about their priority to 'balance margin and mission. . .'
The final hour of the meeting was dedicated to a roundtable discussion about business loan underwriting, led by Danielle Ware of Hope Credit Union and Charlie Breedlove and Lawrence Johnson of Friend Bank. These executives outlined their innovative and solutions-based underwriting processes and services."
The U.S. Department of the Treasury highlighted several CDBA member banks for their leadership in advancing economic opportunity through the Emergency Capital Investment Program (ECIP). These banks were part of a coalition that lead the way in forging public-private partnerships that bring essential capital to underserved rural and urban communities.
Member banks like First Independence Bank, Asian Bank, Locus Bank, M&F Bank NC, Native American Bank, N.A., Optus Bank, and Southern Bancorp drive Deep Impact Lending, fueling small business growth, expanding access to affordable housing, and supporting critical community services.
In a speech on September 10th, Fed Governor Barr expressed his intent "to recommend that the Board re-propose the Basel endgame and G-SIB surcharge rules. This will provide the public the opportunity to fully review a number of key, broad, and material changes to the original proposals and provide comment. (The Federal Reserve) will accept public comments on any aspect of the Basel endgame and G-SIB surcharge proposals."
"Rep. Andy Barr, the chair of the House financial institutions subcommittee, discusses why he should lead Republicans on the Financial Services Committee next year. He offers a preview of his agenda, including pushing legislation that would prevent banks from denying legal businesses access to financial services and why large institutions are suddenly supporting it. He also details what changes regulators should make in new Basel III capital rules, how regulatory reform for banks could happen, and why M&A approval rules should be revamped."