“They needed to hear from us what we thought would work for our communities and what would work for our financial institutions with regard to the terms and condition,” said Bridges. “They listened, and where they could make some changes, they did.”
CDFIs that do not receive regulator approval will be allowed to participate in the program if they can raise enough private capital investment that, when combined with matching funds from Treasury, they’ll meet the viability standard.
“The big banks go to the public markets to raise capital any time there’s a shortfall, and regardless of how much money they’ve lost, they’ve still been able to raise capital,” said Joe Haskins, CEO of Harbor Bank of Maryland (No. 10 on the BE Banks list with $285 million in assets). “We don’t have that luxury. This gives us an opportunity to enhance our capital base.”
Bridges believes that the new terms will have “a very definite and significant” impact on black businesses and hopes that learning about the program will give them a more positive outlook on the lending landscape.
“They listen to the same media that we do and because they’re hearing that—for a number of reasons—banks aren’t lending, many of them didn’t approach banks like ours to inquire about loans,” she said. “I hope this will ease their uncertainty and make them feel like the administration is very serious about its efforts, and that community banks and CDFIs are serious about lending again. Something like this will jump-start their desire to get back in business.”
Deborah Wright, CEO of Carver Federal Savings Bank (No. 1 on the BE Banks list with $789.9 million in assets), said the community bankers who met with Geithner this week explained to Treasury officials that the economy has had a more debilitating effect on the financials at black businesses.
“Part of the capital will be used to make loans to companies that may not look as pristine as they did a couple of years ago. But when you have a cushion, you can take more risks as a bank,” said Wright. “There was a lot of pressure from our regulators to preserve capital, so this will be a shot in the arm for our industry. We have to let people know that we’re back in business.”
The news has been very satisfying for black lawmakers on Capitol Hill who had begun grumbling that the Obama administration had turned a blind eye to the devastation taking place in their districts, and its domino effect on local black businesses.
“The administration is finally realizing that yes, there is such a thing as targeting—just as we targeted those big banks on Wall Street—and focusing help where the need is greatest,” said Rep. David Scott (D-Georgia), who sits on the House financial services committee. “That need is greatest in minority communities.”