Community development bank

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In the United States

In the United States, community development banks (CDBs or CDFI Banks) are commercial banks that operate with a mission to generate economic development in low- to moderate-income (LMI) geographical areas and serve residents of these communities. In the United States, community development banks are certified as such by the Community Development Financial Institutions Fund, a department within the U.S. Department of the Treasury.

United States federal republic in North America

The United States of America (USA), commonly known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico. The State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean. The U.S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The extremely diverse geography, climate, and wildlife of the United States make it one of the world's 17 megadiverse countries.

Bank financial institution

A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.

Community Development Financial Institutions Fund

The Community Development Financial Institutions Fund promotes economic revitalization in distressed communities throughout the United States by providing financial assistance and information to community development financial institutions (CDFI). An agency of the United States Department of the Treasury, it was established through the Riegle Community Development and Regulatory Improvement Act of 1994. Financial institutions, which may include banks, credit unions, loan funds, and community development venture capital funds, can apply to the CDFI Fund for formal certification as a CDFI. As of September 1, 2005, there were 747 certified CDFIs in the U.S. The CDFI Fund offers a variety of financial programs to provide capital to CDFIs, such as the Financial Assistance Program, Technical Assistance Program, Bank Enterprise Award Program, and the New Markets Tax Credit Program.

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Organizers wishing to start a new CDB can seek a state or national bank charter. Federally chartered CDBs are regulated primarily by the Office of the Comptroller of the Currency, like any national bank. According to the OCC Charter Licensing Manual, CDBs are required "to lend, invest, and provide services primarily to LMI individuals or communities in which it is chartered to conduct business." State-chartered community development banks are subject to regulations, qualifications, and definitions that vary from state to state.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federally licensed branches and agencies of foreign banks in the United States. The Comptroller of the Currency is Joseph Otting.

CDFI Certified Banks

In order to become a certified Community Development Financial Institution (CDFI), CD Banks must apply to the United States Community Development Financial Institutions Fund. Successful applicants will have a primary mission of promoting community development and principally serve under served markets and provide development services, in addition to meeting other requirements. [1] CDFI Banks provide retail banking services, they usually target customers from "financially underserved" demographics. While community development banks are only one type of community development financial institution, or CDFI, [2] some organizations use the terms interchangeably.

Retail banking, also known as consumer banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking. Banking services which are regarded as retail include provision of savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards. Retail banking is also distinguished from investment banking or commercial banking. It may also refer to a division or department of a bank which deals with individual customers.

A community development financial institution (US) or community development finance institution (UK) - abbreviated in both cases to CDFI - is a financial institution that provides credit and financial services to underserved markets and populations, primarily in the USA but also in the UK. A CDFI may be a community development bank, a community development credit union (CDCU), a community development loan fund (CDLF), a community development venture capital fund (CDVC), a microenterprise development loan fund, or a community development corporation.

Non-certified community development banks

Although a very small number of US banks are certified CDFIs, [3] many more may be considered Community Development Banks based on their dedication to supporting local economic development and their focus on a particular underserved community. Minority Depository Institutions (MDIs), also known as Minority Banks, are owned by and serve a socially or economically disadvantaged minority community (designated by the FDIC). [4] Community Development Banking Institution (CDBI) is an alternate designation designed by National Community Investment Fund (NCIF) to identify US banks that locate branches and provide loans in economically distressed communities. [5]

Notable community development banks

One of the best known community development banks was ShoreBank , founded in Chicago in 1973. [6] ShoreBank had branches in Chicago's South and West sides, Cleveland, and Detroit. The bank established subsidiaries that provide equity investing, consulting, and environmental banking services and affiliated nonprofits that provide related financing, technical assistance, and consulting services. ShoreBank and its affiliated companies have projects in 30 countries. Notably, ShoreBank incorporated environmental conservation into its mission during the 1990s. On August 20, 2010, ShoreBank's banking operations were closed by the FDIC, reopening under Urban Partnership Bank.

ShoreBank

ShoreBank was a community development bank founded and headquartered in Chicago. At the time of its closing it was the oldest and largest such institution, and in 2008 had $2.6 billion in assets. It was owned by ShoreBank Corporation, a regulated bank holding company.

Chicago City in Illinois, United States

Chicago, officially the City of Chicago, is the most populous city in Illinois and the third most populous city in the United States. With an estimated population of 2,716,450 (2017), it is the most populous city in the Midwestern United States. Chicago is the county seat of Cook County, the second most populous county in the United States, and the principal city of the Chicago metropolitan area, which is often referred to as "Chicagoland." The Chicago metropolitan area, at nearly 10 million people, is the third-largest in the United States; the fourth largest in North America ; and the third largest metropolitan area in the world by land area.

Cleveland City in Ohio

Cleveland is a major city in the U.S. state of Ohio, and the county seat of Cuyahoga County. The city proper has a population of 385,525, making it the 51st-largest city in the United States, and the second-largest city in Ohio. Greater Cleveland is ranked as the 32nd-largest metropolitan area in the U.S., with 2,055,612 people in 2016. The city anchors the Cleveland–Akron–Canton Combined Statistical Area, which had a population of 3,515,646 in 2010 and is ranked 15th in the United States.

The Grameen Bank of Bangladesh is a microfinance organization and community development bank founded by Muhammad Yunus. The bank has grown into a family of over two dozen for-profit and nonprofit enterprises including the Grameen Foundation, and the Grameen Bank and its founder were awarded the Nobel Peace Prize in 2006.

Grameen Bank is a microfinance organisation and community development bank founded in Bangladesh. It makes small loans to the impoverished without requiring collateral.

Bangladesh Country in South Asia

Bangladesh, officially the People's Republic of Bangladesh, is a country in South Asia. It shares land borders with India and Myanmar (Burma). The country's maritime territory in the Bay of Bengal is roughly equal to the size of its land area. Bangladesh is the world's eighth most populous country as well as its most densely-populated, to the exclusion of small island nations and city-states. Dhaka is its capital and largest city, followed by Chittagong, which has the country's largest port. Bangladesh forms the largest and easternmost part of the Bengal region. Bangladeshis include people from a range of ethnic groups and religions. Bengalis, who speak the official Bengali language, make up 98% of the population. The politically dominant Bengali Muslims make the nation the world's third largest Muslim-majority country. Islam is the official religion of Bangladesh.

Microfinance is a category of financial services targeted at individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems. Microfinance services are designed to be more affordable to poor and socially marginalized customers and to help them become self-sufficient.

Other CDBs in the United States include:

Organizations that support, advocate, and convene Community Development Banks in the US:

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Federal Deposit Insurance Corporation company

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions. The FDIC was created by the 1933 Banking Act, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this was increased several times over the years. Since the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2011, the FDIC insures deposits in member banks up to US$250,000 per ownership category.

Banking in the United States

Banking in the United States began in the late 1790s along with the country's founding and has developed into highly influential and complex system of banking and financial services. Anchored by New York City and Wall Street, it is centered on various financial services namely private banking, asset management, and deposit security.

Financial institution institution that provides financial services for its clients or members

Financial institutions, otherwise known as banking institutions, are corporations that provide services as intermediaries of financial markets. Broadly speaking, there are three major types of financial institutions:

  1. Depository institutions – deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies;
  2. Contractual institutions – insurance companies and pension funds
  3. Investment institutions – investment banks, underwriters, brokerage firms.

A banking license is a legal prerequisite for a financial institution that wants to carry on a banking business. Under the laws of most jurisdictions, a business is not permitted to carry words like a bank, insurance, national in their name, unless it holds a corresponding license. Depending to their banking regulations, jurisdictions may offer different types of banking licenses, such as

Community Reinvestment Act

The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.

Chicago Community Loan Fund (CCLF) is a certified Community development financial institution (CDFI) that provides loans and grants to community development organizations engaged in affordable housing, social service and economic development initiatives in Chicago.

An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. The ethical banking movement includes: ethical investment, impact investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, and social enterprise.

The Office of Financial Institutions (OFI) is an agency of the United States federal government in the United States Department of the Treasury. OFI coordinates the department's efforts regarding financial institutions legislation and regulation, legislation affecting Federal agencies that regulate or insure financial institutions, and securities markets legislation and regulation. The office coordinates the department's efforts on financial education policy and ensuring the resiliency of the financial services sector in the wake of a terrorist attack.

Bank regulation in the United States is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its organizational structure, it may be subject to numerous federal and state banking regulations. Apart from the bank regulatory agencies the U.S. maintains separate securities, commodities, and insurance regulatory agencies at the federal and state level, unlike Japan and the United Kingdom. Bank examiners are generally employed to supervise banks and to ensure compliance with regulations.

Opportunity finance refers to socially responsible investing by an institution in an organization or group of individuals.

The Conservation Fund is an American environmental non-profit with a dual charter to pursue environmental preservation and economic development. Since its founding in 1985, the organization has protected more than 7 million acres of land and water in all 50 states, including parks, historic battlefields, and wild areas. The Fund works with community and government leaders, businesses, landowners, conservation nonprofits and other partners to create innovative solutions that integrate economic and environmental objectives. The Fund also works with communities to strategically plan development and green space and offer training in conservation and the sustainable use of natural resources.

Dodd–Frank Wall Street Reform and Consumer Protection Act Regulatory act implemented by the Obama Administration after the 2008 Financial Crisis.

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into United States federal law by US President Barack Obama on July 21, 2010. Passed in response to the 2008 global financial crisis, the Act brought the most significant changes to financial regulation in the nation since the regulatory reform that came following the Great Recession. It made changes in the American financial regulatory environment affecting all federal financial regulatory agencies and almost every part of the nation's financial services industry.

A community bank is a depository institution that is typically locally owned and operated. Community banks tend to focus on the needs of the businesses and families where the bank holds branches and offices. Lending decisions are made by people who understand the local needs of families, businesses and farmers. Employees often reside within the communities they serve.

This article details the history of banking in the United States. Banking in the United States is regulated by both the federal and state governments.

The Support Center is a not-for-profit organization and a community development financial institution(CDFI), based in Raleigh, North Carolina. It is a statewide nonprofit that partners with Community Development Credit Unions (CDCUs) and community-based organizations to provide small business and mortgage lending services to its members; and to provide training, grants, and loans to create economic opportunities for individuals, families, and communities in underserved markets.

Urban Partnership Bank is a U.S. Federal Deposit Insurance Corporation-insured, full-service community development bank in the United States with $1.4 billion in assets. It was established August 20, 2010, when it acquired the deposits and some of the assets of ShoreBank from the FDIC, and is headquartered in Chicago, Illinois.

References

  1. "Archived copy" (PDF). Archived from the original (PDF) on 2011-10-15. Retrieved 2010-08-26.
  2. "Archived copy". Archived from the original on 2010-07-19. Retrieved 2010-07-31.
  3. National Community Investment Fund, "The CDFI Banking Sector: 2012 Annual Report"
  4. FDIC definition of Minority Depository Institution
  5. NCIF's definition of CDBI
  6. http://www.socialfunds.com/news/article.cgi/673.html