This Week in ESG and Impact Investing

Key insight: Traditional thinking that Community Reinvestment Act investments involve high risk and low returns is giving way to an approach focused on low-risk, high-impact projects. Supporting data: Banks deploy more than $100 billion annually in CRA investments. Expert quote: "I think you're going to see more of this — alternative investment opportunities for banks to support housing in a tactical way in high-need communities." — Hugh Allen, head of commercial real estate at TD Bank William Cunningham, CEO of Creative Investment Research in Washington D.C., and a longtime authority on impact investing, said banks are giving more weight to investments' social returns, which has made them more open to alternative investment strategies.   A Maine-based fund manager is seeking to raise as much as $45 million from banks to support long-term affordable housing in distressed neighborhoods in South Dallas. The fund, which will invest in transit-oriented projects in the T...

NOTE: We spoke with this reporter on Nov 30, 2021, This article was published almost a year later, on Oct. 21, 2022. A related article* published in the New York Times on the same day, 10/21/22, seemed to reflect our comments and research.   Morgan Phelps  faced a business conundrum in the summer of 2020. Phelps is the founder of Colorful Connections, a Milwaukee firm that helps businesses attract and retain diverse employees. She formed her business model in 2017 while working in the communications industry. After completing accelerator programs, such as through BizStarts and gener8tor, Phelps took Colorful Connections live in fall 2019. Although demand slowed at the start of the Covid-19 pandemic, Colorful Connections faced a new problem after the murder of George Floyd by a Minneapolis police officer. That event energized calls for racial justice and equity across the country. Phelps suddenly had a rush of clients, but the cash flow from that work wouldn’t come u...

Blow up the CRA and start from scratch By    William Michael Cunningham June 22, 2022, 9:47 a.m. EDT 2 Min Read The Community Reinvestment Act was enacted in 1977 “to address inequities in access to credit for low- and moderate-income individuals and communities.” The law should be repealed and replaced. Like hanging a crystal chandelier in a lean-to shack, any efforts to revise the law are a waste of time. This especially includes efforts  proposed by the Federal Reserve Board “to strengthen the achievement of the core purpose of the statute, and to adapt to changes in the banking industry, including the expanded role of mobile and online banking.” Percentage of Home Loans Applications Approved, by race, at OneUnited, a Black-owned bank, in 2020 The increase in financial institution-induced harm, including environmental damage, demands a different, more honest and authentic approach in reviewing CRA’s inability to facilitate access to banking services and...

According to the Financial Times, megabank Wells Fargo & Co “has asked the U.S. Federal Reserve to remove an asset cap introduced during its accounts scandal in order to allow it to support businesses and customers hit by the coronavirus economic fallout..” The growth cap was imposed after the bank “acknowledged that it improperly foreclosed on 545 distressed homeowners after they asked for help with their mortgages, created 3.5 million fake accounts, charged 570,000 customers for auto insurance they did not need, and illegally repossessed vehicles from hundreds of service members.” Former bank employees state that Wells "targeted black churches” and neighborhoods by offering escalating-interest mortgages, which some loan officers called “ghetto loans.” This week, the bank demanded that call center workers come to the office despite coronavirus, but agreed to pay "all of its domestic full-time employees who make less than $100,000 a year.. a pre-tax payment of $...

By  John Reosti , The American Banker Newspaper.  Published  March 07 2018, 3:10pm EST Howard Bancorp in Maryland and Bryn Mawr Bank Corp. in Pennsylvania, both banks with suburban roots, have marketing challenges on their hands after recent acquisitions in more urban areas. Their goals — to raise their profiles in new, diverse neighborhoods — are identical, but their approaches are very different. The $2.1 billion-asset Howard is so committed to Baltimore that it moved its headquarters downtown from suburban Ellicott City after completing the purchase of First Mariner Bank on March 1. Now, the merged company plans to increase its philanthropy budget and focus it on projects that will benefit what CEO Mary Ann Scully termed “stressed” communities; job training will be a top priority. Bryn Mawr deepened its presence in Philadelphia after acquiring Royal Bank American in December. The resulting $4.5 billion-asset company has established a multicultural adviso...