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Low-Income Lending and Investing Opportunities a Priority For Black and Community Banks

An article on BTCManager.com, reproduced in part below, noted several key features of HR41.

"On January 3rd, 2019, Bill HR 41, titled “RESCUE Act for Black and Community Banks” was released. It’s stated purpose is 'To provide regulatory relief for Black and community banks, to codify the Minority Bank Deposit Program, and for other purposes.'

The Minority Bank Deposit Program (MBDP) is a voluntary program that encourages credit unions, as well as female and minority-owned banks to become depositories and financial agents for low-income communities. The initiative was created by the US Department of Treasury and is meant to make banking services more accessible to the most underserved communities. 

Although not stated explicitly, 'codifying' the MBDP program could imply the use of a blockchain ledger and smart contract system to record and deploy short-term loans based on a predefined set of rules written in code. Such a system would be a huge boost to communities that are underbanked and often targeted by payday lending services. 

Payday lending is a $40 billion industry that makes its money by preying on those desperate for short-term capital. Loan interest rates can start out at a modest 10-15%, but can easily jump to 300% once borrowers become trapped in a debt cycle of continuous borrowing to keep up with bills and everyday expenses. According to Pew Trusts research, 12million American currently use Payday Lending services, 12% of whom are African Americans. Smart contract based lending would be a highly efficient and cost-effective alternative for both the borrowers and lenders. 

Within the same bill, it mentions (requests) that the Comptroller General of the US...conduct a study on blockchain technology and how it could be used to enable lower-income individuals to invest in start-ups and other crowdfunded companies. 

Crowd investing has long been thought of as a way to give businesses who aren’t a right fit for bank loans or VC capital a chance to raise money while opening opportunities for regular people to grow their wealth through access to more investment opportunities. Blockchain technology would give investors the transparency they need to feel safe about where their money is going, especially if rules were embedded into smart contracts to ensure that funds were only allocated when certain business milestones were achieved."

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