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A bank cited by regulators for lending policies allegedly favoring minorities and women over white males is proof for some of just how frustrating it is for institutions to comply with fair lending laws.
May 7
WASHINGTON The Office of the Comptroller of the Currency is easing regulations on minority-owned banks in order to help them raise capital.
Comptroller of the Currency Thomas Curry said Tuesday that minority-owned banks would be allowed under certain circumstances to continue raising capital even if the share of minority ownership fell below 51%. In order to qualify, the revised policy says banks must continue to serve the credit and economic needs of the community in which they are chartered and that the community is predominantly minority.
"The OCC has a deep interest in the success of the nation's community banks generally, and we are particularly concerned with those community institutions that are minority-owned," Curry said in prepared remarks at the annual Interagency Minority Depository Institutions and CDFI Bank Conference.
"Minority-owned banks and thrifts provide financial services to consumers and businesses in communities that might not otherwise have access to a financial institution, and so your success is vital to the economic well-being of disadvantaged or underserved neighborhoods in cities and towns across America."
Curry signed the revised policy on June 7.
The OCC also gave additional leeway to mutual savings institutions if a majority of the board and a "significant percentage" of senior management positions are held by women.
The change should help certain community banks tap a broader capital market after facing years of weak credit and capital availability, the OCC said.
Curry said the change should help minority banks in meeting impending new Basel III capital requirements.
"Today, I know many of you are worried about the new capital requirements, and whether you will be expected to add to your capital base. But I recognize that in the aftermath of the financial crisis and recession, some of you need to be able to raise more capital to shore up your balance sheets, while others will seek additional equity so you can grow to meet the needs of your communities," Curry said. "That can be difficult for any bank or thrift, but it's a particular challenge for minority institutions."
There are less than 200 certified minority depository institutions in the country, according to the $1 billion-asset Urban Partnership Bank, which announced Monday that it received the designation. The Chicago-based bank gained minority status when it added a minority business owner, Phil Fuentes, to its board, taking it over the 50% ownership requirement based on board members, not stock ownership.
"Deposits are the lifeblood of a community development bank, and this designation will help us attract additional resources that we can then reinvest in our communities," William Farrow, the bank's president and chief executive, said in a press release. "Our goal is to help businesses grow and create new jobs, strengthen nonprofits, and develop quality, affordable housing all the things that are essential to the well-being of the neighborhoods we serve."
The bank said the designation is also attractive because any institution that makes a deposit or investment in a minority depository institution can be eligible for Community Reinvestment Act credit.
During Curry's remarks on minority depository status, he also encouraged feedback on potential changes to the CRA that regulators have been reviewing for some time.
"Minority bankers provided feedback through our CRA review process, and I would encourage you to continue to make your views known about how we can best update CRA to reflect the financial services marketplace today," he said. "The current CRA statute, regulations, and interpretive questions and answers recognize the vital financial services that minority institutions provide and their pivotal role in promoting the economic vitality of the communities they serve."
