Small Business Lending and CRA Issues Trending

Written by Dory Rand on April 7, 2016 - 11:21am

Leading up to and since the National Community Reinvestment Coalition (NCRC) conference in March, Woodstock Institute has been part of the surge in work on, and interest in, small business lending and Community Reinvestment Act (CRA) issues at local and national levels.

Woodstock was pleased to lead a large and diverse delegation of NCRC members and nonprofit leaders from Illinois on Capitol Hill visits with our Illinois elected officials as part of NCRC’s largest and most successful 25th anniversary conference. We met with legislative aides from the offices of Senators Durbin and Kirk as well as Representative Jan Schakowsky and staff from the offices of Representatives Quigley, Hultgren, Dold, Bustos, Kelly, and Gutierrez. In addition to urging them to strengthen and modernize the CRA, we also encouraged them to support the independence of the Consumer Financial Protection Bureau (CFPB), and preserve the affordable housing goals of Fannie Mae and Freddie Mac. During the conference, Woodstock moderated and presented on panels regarding small business lending and age-friendly banking.

One of the many conference highlights was the public signing by Beth Mooney, CEO of Key Bank, of an historic $16.5 Billion CRA agreement with NCRC and its members across the country. In recent speeches and again at the NCRC conference, Comptroller Tom Curry of the Office of the Comptroller of the Currency emphasized the importance of banks developing strong, public CRA plans with community input, and of regulators holding banks accountable via conditional approvals of proposed bank mergers and acquisitions. The NCRC Board of Directors had the pleasure of meeting with Fed Chair Janet Yellen, Governors Stanley Fischer and Jerome Powell, and senior staff at the Federal Reserve Board of Governors about a wide range of issues.

During the conference week, Woodstock and Accion Chicago had opportunities to discuss with Director Cordray and CFPB staff, and with senior staff of the federal bank regulators (the Federal Reserve Board, the FDIC, and OCC) our concerns regarding small business lending, including: the decline in bank lending to small businesses (especially loans of $100,000 or less to micro-businesses, women, people of color, and borrowers in low- and moderate-income areas); the unmet needs that are driving borrowers to predatory, non-bank, online lenders; risky bank partnerships with non-bank, online third party lenders; significant declines in lending following branch closures (especially in LMI areas and communities of color); and, the need for strong small business data collection rules under section 1071 of the Dodd-Frank Act.

Since the conference, NCRC members in Midwest states affected by the proposed acquisition of First Merit Bank by Huntington Bank of Ohio have attended community meetings in Ohio, Michigan, and Illinois with Huntington CEO Steve Steinour and his team, and we hope to create another strong, public, enforceable CRA agreement. In addition, Woodstock submitted comments on the proposed acquisition of American Chartered Bank by MB Financial Bank and asked the OCC to approve the proposal conditioned on the bank’s development of a strong, public CRA plan with community input and redress of areas in which the banks received Needs To Improve and Substantial Noncompliance ratings on their latest CRA exams.

Meanwhile, Woodstock, Accion Chicago, and the Small Business Majority worked closely with Chicago Treasurer Kurt Summers’ team to draft a bill that would protect small business owners in Illinois from becoming trapped in debt by predatory small business lenders. Illinois Senator Jackie Collins is expected to introduce a bill in the Illinois General Assembly which would, among other things, require a license and registration for all lenders and brokers (excluding banks and credit unions, which are already regulated), transparent disclosure of an all-in APR that allows borrowers to understand costs and comparison shop, and use of the Illinois Department of Financial and Professional Regulation’s real-time database to input underwriting information and obtain permission to lend based on an Ability To Repay standard.

We have enjoyed working closely with Accion Chicago on these efforts and we are thrilled that we will be honoring Accion Chicago as the recipient of Woodstock’s 2016 Community Investment Award at our annual reception on May 12, from 6 to 8 pm, at Rebuild Foundation’s Stony Island Arts Bank. I hope that you will join us there for a wonderful evening of music, delicious food and drinks from local vendors, great networking, and the wonderful art collection there.