U.S. Treasury Allocates $8.7 Bln To Community, Minority Lenders – Reuters

A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

WASHINGTON, Dec 14 (Reuters) – U.S. Vice President Kamala Harris and Treasury Secretary Janet Yellen on Tuesday announced more than $8.7 billion in capital investments in community development financial institutions and minority-owned banking firms to boost lending in disadvantaged areas, the Treasury said.

The capital allocation for 186 institutions is part of $12 billion in funding provided for CDFIs and minority banks included in coronavirus relief and government funding passed at the end of 2020 and signed into law by former President Donald Trump.

“We know that the communities hurt most by COVID-19 have often been communities of color, and Treasury has implemented relief legislation with equity in mind,” Yellen said in a statement. “Today, we’re seeing one result of that effort: Treasury, through the Emergency Capital Investment Program (ECIP), is injecting nearly $9 billion into Community Development Financial Institutions and Minority Depository Institutions.”

The investment follows an initial allocation of $1.25 billion from the COVID-19 relief funds to 863 community lenders in June.

The states with the largest number of institutions being offered new capital include Mississippi, Louisiana, North Carolina, California, and Texas, the Treasury said.

Among the institutions recommended for an ECIP investment, approximately 54% are banks and 46% are credit unions. The ECIP investments will range in size from more than $200 million to less than $100,000, the Treasury said, with $3.1 billion offered to 57 minority depository institutions.

These institutions often make smaller loans to small, independent businesses, and work with borrowers facing racial barriers who need more time-intensive technical support.

The announcement came at the Treasury’s annual Freedman’s Bank Forum, launched in 2016 by then-Treasury Secretary Jack Lew when he renamed the Treasury Annex building across from main Treasury the “Freedman’s Bank Building.”

Abraham Lincoln created the Freedman’s Savings and Trust Co in 1865 for newly emancipated Black Americans to safeguard their earnings, build financial security and generate family wealth. The bank helped some 100,000 Black people and institutions amass $57 million in savings and wealth, and paved the way for today’s minority depository institutions.

But the racial wealth gap persists. U.S. data shows the typical white family has eight times the wealth of the typical Black family and five times that of the typical Latino family.

Reporting by David Lawder; Additional reporting by Nandita Bose; Editing by Paul Simao

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