Brown, Warnock Urge Banking Agencies to Support Banks that Serve Black and Brown Communities
Following News of FDIC’s Sale of Alamerica Bank Shares, Senators Urge Banking Agencies to Prioritize Preserving Black-Owned Banks
Today, U.S. Senator Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Senator Reverend Raphael Warnock (D-GA), Chairman of the Subcommittee on Financial Institutions and Consumer Protection, sent a letter urging the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and Office of the Comptroller of the Currency (OCC) to take stronger action to support Minority Deposit Institutions (MDIs).
“For generations, the financial system has denied communities of color equal access to the credit and banking services that allow families to build wealth and pursue opportunity. MDIs are an essential counterweight to these longstanding inequities. MDIs have a larger footprint and originate more loans in minority and low- or moderate-income communities, and thus help make financial services available to every American regardless of income, race, gender, or geography,” the Senators wrote.
Senators Brown and Warnock pointed to FDIC’s auction of its Alamerica Bank shares, which could end the bank’s long-time minority ownership status and reduce the already small number of Black-owned banks serving consumers. “The FDIC should make every effort to sell its Alamerica shares to another Black-owned financial institution,” they urged.
“We need more MDIs and Black-owned banks, not fewer, and we applaud the recent steps in Columbus, Ohio to establish Adelphi Bank, which would be Ohio’s only Black-led bank and the twenty-first nationwide. Adelphi will serve the unmet needs of minority and low-income consumers in Columbus, and we are hopeful that similar efforts will stand up new MDIs elsewhere in Ohio and across the country,” the Senators wrote. “Regulators must do everything in their power not only to preserve and promote MDIs, but also ensure that they have the support and resources they need to be successful.”
A copy of the letter is available here and below.
Dear Chair McWilliams, Chair Powell, and Acting Comptroller Hsu:
Minority Deposit Institutions (MDIs) play an essential role in meeting the financial needs of communities underserved by large banks. For generations, the financial system has denied communities of color equal access to the credit and banking services that allow families to build wealth and pursue opportunity. MDIs are an essential counterweight to these longstanding inequities. MDIs have a larger footprint and originate more loans in minority and low- or moderate-income communities, and thus help make financial services available to every American regardless of income, race, gender, or geography.
Yet, the number of these critical institutions continues to decline, and as you know, the Federal Deposit Insurance Corporation (FDIC) is poised to auction off its controlling stake in Alamerica Bank. While Alamerica has long been Black-owned, the auction is likely to end the bank’s minority ownership, reducing the already small number of Black-owned banks serving consumers. Alamerica represents an opportunity to preserve Black-owned banking, and we should not allow the bank’s rare and important status to slip away. The FDIC has recognized the imperative to preserve MDIs’ minority character in resolution proceedings. The FDIC should make every effort to sell its Alamerica shares to another Black-owned financial institution.
We need stronger action at all of the federal banking agencies to ensure that MDIs survive and continue to thrive so that the communities they serve can participate in our financial system and economy. Congress requires your agencies to preserve and promote MDIs under Section 308 of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). While we are encouraged by your agencies’ commitments to support MDIs, a one size fits all approach to supervision and oversight of these institutions does not take into account the unique obstacles that MDIs and their communities face. Your agencies must do more to understand these challenges and ensure that all MDIs can access the essential programs intended to support their success, like the Emergency Capital Investment Program passed in the bipartisan Consolidated Appropriations Act of 2021.
We encourage your agencies to work with MDIs and their communities so that our banking system works for everyone. We need more MDIs and Black-owned banks, not fewer, and we applaud the recent steps in Columbus, Ohio to establish Adelphi Bank, which would be Ohio’s only Black-led bank and the twenty-first nationwide. Adelphi will serve the unmet needs of minority and low-income consumers in Columbus, and we are hopeful that similar efforts will stand up new MDIs elsewhere in Ohio and across the country. Regulators must do everything in their power not only to preserve and promote MDIs, but also ensure that they have the support and resources they need to be successful.
Thank you for your attention to this important matter.
###
Next Article Previous Article
