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This week, Wells Fargo joined the list of large banks introducing short-term credit products — and the much smaller OneUnited Bank in Boston unveiled a version of its own, intended as an alternative to payday loans. OneUnited's loan, called CashPlease, is designed to help customers of the $635 million-asset Black-owned bank manage their cash flow without the hurdles and higher costs some other lenders might impose. Instead of conducting credit checks, it looks at applicants' checking-account activity and other aspects of their relationship with the bank. Funds arrive within four hours of the loan's approval. OneUnited's rollout of CashPlease comes after the introduction of similar small-dollar loans by several large banks. In October 2020, for instance, Bank of America launched Balance Assist, which offers loans of up to $500 for a flat $5 fee and a repayment period of three monthly installments.
Do you know what your top 3 community development priorities are for 2022? Or are you overwhelmed with competing priorities and not sure where to start? Register now for this free webinar with CRA expert Linda Ezuka to learn how to create an effective and actionable CRA strategy for your institution. Some of the topics we'll cover include planning considerations given your current CRA exam cycle, aligning CRA initiatives with your bank's core business strategy, developing your CRA strategy and goals, partnering with business units to set performance targets that are mutually beneficial, and creating an action plan with clear steps to help you hit the ground running.
On Tuesday, January 18, 2022 the Community Development Financial Institutions Fund (CDFI Fund) is conducting an informational webinar on its new Title VI Compliance Worksheet. All fiscal year 2022 CDFI Fund award applicants are being asked to complete a Title VI Compliance Worksheet once annually with their applications. Title VI of the Civil Rights Act prohibits discrimination on the grounds of race, color, or national origin in programs or activities receiving federal financial assistance. Award applicants must be compliant with federal civil rights requirements in order to be eligible to receive federal financial and technical assistance awards from the CDFI Fund. This requirement applies to award applicants, as well as their prospective sub-recipients that are not direct beneficiaries of federal financial assistance (e.g., Depository Institutions Holding Company and their Subsidiary Depository Institutions).
People of color are paying more than twice the amount in banking fees than White Americans, a Bankrate survey found. When asked about fees such as ATM, overdraft and routine service charges, Black adults report shelling out an average of $12 a month for checking accounts at banks or credit unions and Hispanics are paying $14 a month, on average. White checking account holders said they are paying an average $5 per month, according to the survey, which was conducted by YouGov. For minority communities, the disparity in bank fees are indicative of the inequality they have faced for years, suggested John Holdsclaw IV, board chair of the Coalition of Community Development Financial Institutions. CDFIs are credit unions, banks, microloan funds or venture capital providers that provide low-income communities access to financial services.
While the debate over whether the U.S. should create its own central bank digital currency continues, the ultimate conclusion is already clear — like it or not, a U.S. digital dollar is coming. If you're a banker, particularly a community banker, this should scare the hell out of you. Because depending on how the digital dollar is created, it could create serious competition for federally insured deposits, drying up the primary source of funding for banks. So far, bankers have been largely absent from this debate, understandably distracted by the economic turmoil caused by the pandemic and other policy fights. There is also a sense that while the issue is important, there is plenty of time to worry about it later. But there is growing pressure for regulators and Congress to respond quickly because the U.S. is already behind internationally in the discussion over CBDCs. That’s in part due to China, which has rolled out a digital version of the yuan in several provinces. European countries are also experimenting with CBDCs. This dynamic will likely force policymakers to act sooner than most bankers expect.
A trio of investment funds established to inject capital into minority-owned banks and community development financial institutions share the same ambitious goal: eliminating the nation's racial wealth gap. To date, however, the collective impact of MDI Keeper's Fund, the Black Bank Fund and the Federal Deposit Insurance Corp.'s Mission-Driven Bank Fund has been limited. One big reason is that other sources of capital — namely, large banks and the federal government — are also making investments in minority depository institutions and CDFIs. The recent influx of cash — largely the result of big financial commitments to Black banks that followed the murder of George Floyd — means that some historically undercapitalized institutions don't need capital right now. M&F Bank and Optus Bank are mentioned.
There's money to be made for banks that offer low-cost deposit accounts to previously unbanked or underbanked households. That's one of the key takeaways from a recent Federal Reserve Bank of St. Louis report that looks at new account openings, debit transactions and online banking activity, associated with Bank On checking accounts. Bank On accounts, offered by dozens of banks, must charge no overdraft fees and no-fee debit cards, among other things, as designated by the nonprofit Cities for Financial Empowerment Fund. Last year, customers at 17 financial institutions opened 2.2 million new Bank On checking accounts. Among those, 82% were new customers and 79% regularly used online banking options, the St. Louis Fed said in a report based on information submitted to its Bank On National Data Hub.
Durango resident Jenni Gross was out of work for more than eight months after the building where she leased space for her business, The Soup Palette, was sold to a new owner, and she was forced to close. Today she operates out of a food truck she was able to purchase through a unique lending partnership between the First Southwest Bank and its sister non-profit. Hundreds of entrepreneurs in Southern Colorado have been able to start or expand their businesses thanks to a unique partnership between the First Southwest Bank and its sister non-profit, the First Southwest Community Fund. During the pandemic, the community fund established the Innovate Onwards Program to provide businesses with low-interest loans for working capital to rehire staff, upgrade equipment, or purchase inventory. Another program, the Creative Arts Fund, provides low-interest loans for up to $15,000 to artists and arts businesses to purchase materials, establish a gallery, or even an online presence. More recently, the community established a food truck loan fund to help entrepreneurs affordably enter the food industry.
Values-based community bank Climate First Bank has partnered with Project Regeneration to develop a one-of-a-kind checking account that will support, promote and create funding for the environmental nonprofit's mission of planetary regeneration. When a client opens a Project Regeneration checking account, a $100 donation will also be made directly to Project Regeneration to assist with the foundation’s sustainable initiatives. In addition to the one-time contribution, monthly earnings garnered from the interest on all balances will be donated to the foundation. The account will also have no minimum account balance and no monthly fees.
Across the country, community groups are soliciting e-bike companies for help competing for state money in the hopes of getting more people riding. Cities like Portland, Denver, and Buffalo are launching pilot projects that explore ways to subsidize e-bike purchases for low-income families or collect enough bikes together to launch mini-shared micromobility services. But the goal isn't just to get more people on e-bikes; it's also about reducing tailpipe emissions and saving the planet. Through a partnership with Spring Bank and grants from the state government, the Equitable Commute Project is hoping to subsidize the cost of VanMoof e-bikes in the Bronx by up to 50 percent. That means instead of shelling out $2,298 for the S3 e-bike, customers would only have to pay $1,149.