News
The CDFI Fund has invited comment on the CDFI Program and Native American CDFI Assistance Program (NACA Program) Applications. The fund seeks particular comment on whether the requested information is conducive to the fund’s goals, the degree of burden entailed in the collection of information, ways to enhance the quality of the information and ways to minimize the burden on respondents, including through the use of automated collection techniques or other forms of technology. The deadline for comment submission is April 12, 2015.
Urban Partnership Bank Senior Commercial Banker Jeffrey Wright spoke in an interview about his work on the Chicago’s Business Leadership Council’s emerging leaders group. The council’s mission is to create jobs, opportunities and leaders in the black community. Wright was born on Chicago’s West Side, where he was raised by a single mother on a fixed income. Now he has an undergraduate degree from Georgetown, an MBA from Northwestern’s Kellogg Business School and is a senior banker at Urban Partnership, where he is being groomed to be a future CEO. “I have direct access to really successful business leaders,” Wright said. “As I am making decisions and looking to improve my situation they are accessible and willing to help.”
Ho-Chunk Inc., the Winnebago Tribe of Nebraska's economic development corporation, has become a major shareholder in Native American Bancorporation, the Denver, Colo.-based holding company of Native American Bank. The bank is owned by 28 federally recognized tribes, Alaska Native Corporations and tribal organizations. “We have made a concerted effort to source projects that meet the bank’s mission while providing economic diversity and meaningful jobs," said Thomas Ogaard, president and CEO of Native American Bank and Native American Bancorporation. "The capital support provided by Ho-Chunk, Inc. is a valuable resource that allows us to continue these efforts, grow the bank and make a difference in the lives of the people we serve.”
Members of BancAlliance, a consortium of about 200 community banks, will start using Lending Club, a website that facilitates loans to individuals, to build new portfolios of consumer loans. The banks will each commit to buy a certain amount of loans from Lending Club, which will vet borrowers for their ability to repay. Until now, small banks generally haven’t been able to justify the cost of underwriting unsecured loans of less than $35,000 without requiring collateral because big banks can do so much more efficiently. By relying on Lending Club’s software to quickly evaluate a borrower’s ability to repay, small banks hope to extend credit to borrowers with lower credit scores than they previously served and build a pool of those loans big enough that a few bad apples won’t bring down the whole portfolio.
Broadway Federal Bank avoided failure during the Great Recession and now appears on track for a full recovery. In 2008, the bank received $9 million from Treasury's Troubled Asset Relief Program to stay afloat. Treasury and the nonprofit NCIF, which had backed Broadway Federal's 2013 recapitalization, subsequently agreed to convert their preferred shares to common stock — giving up half the amount owed them. Now, in Broadway Federal's Q3 2014 financial report, the bank's net income has risen to $765,000, up from $584,000 a year earlier. "In October, we raised $9.7 million and paid off all of the senior debt," said Broadway Financial CEO Wayne-Kent Bradshaw. "The bank has a clean and pure common stock balance sheet. We spent three years fixing things and now we are ready to take off."
In a wide-ranging interview, Industrial Bank President B. Doyle Mitchell discussed the bank's history, its positive reputation among D.C.-area businesses, and the burden of regulation for community development banks. "There's way more regulation that we have to adhere to... It's more difficult to help people. And I grew up in a business where I saw how we were helping people as a financial institution, we were able to make money at the same time -- we were able to do well and do good at the same time. Now there's so many "t's" that need to be crossed, so many "i's" that need to be dotted. If you don't have all your documentation lined up, sometimes it is more difficult to help people."
President Obama has released the Administration’s FY 2016 Budget proposal. Included is total funding of $233.5 million for the CDFI Fund, a slight increase from $232 million in FY 2015. Once again, the president’s proposal eliminates funding for the Bank Enterprise Award. However, it includes increases to other CDFI Fund programs: $157.5 million for the CDFI Program, $35 million for the Healthy Food Financing Initiative and $16 million for the Native American CDFI Assistance Program. It also proposes permanently extending the New Markets Tax Credit Program at $5 billion per year, extending the CDFI Bond Guarantee Program through FY 2017 and restoring the Capital Magnet Fund. The proposal will now move on for consideration by the House and Senate appropriations committees.
The CFPB is expected to release rules early this year that will allow it—for the first time—to exercise the authority it was given under the Dodd-Frank Act to regulate payday loans. The CFPB says state laws governing the industry often fall short and that fuller disclosures of the interest and fees may be needed. Although Dodd-Frank bars the CFPB from capping interest rates, the CFPB has a number of options, including deeming industry practices unfair, deceptive or abusive to consumers. The agency is also considering tighter rules to ensure a consumer has the ability to repay. That could mean requiring credit checks, placing caps on the number of times a borrower can draw credit or encouraging states or lenders to lower rates.
A report by the Pew Charitable Trusts finds a close relationship between bank overdraft fees and customers closing checking accounts. The report compares the experiences of high frequency overdrafters, who incur more than four debit card overdrafts a year, and those of low-frequency overdrafters, who paid one to three overdraft penalties. High-frequency overdrafters paid an average of $95 in total fees for their last negative balance, nearly twice the $51 low-frequency overdrafters paid. But for both groups, overdraft charges increased the odds account holders would close their accounts and become unbanked; overdraft fees have caused one-quarter of low-frequency and one-third of high frequency overdrafters to close a checking account.
Spring Bank is supporting the growth of small businesses and startups in the Bronx through a partnership with the Business Outreach Center, a CDFI-certified small-business development organization. In the summer of 2014, Spring Bank wrote a letter of credit to help the Business Outreach Center secure the lease for the Bronx Business Incubator, a new space for entrepreneurs to conduct business, engage in workshops and network with peers. “[A] majority of small businesses get their first loans from community banks," said Demetris Giannoulias, founder and chairman of Spring Bank. "It's fun to meet people and hear them talk passionately about something that they're working on and to be able to be a part of it. That's the great thing about being a banker."