This Week in ESG and Impact Investing

We'll give you the good news first. According to unnamed sources, the FDIC will soon lift a Cease and Desist Order imposed on United Bank of Philadelphia on January 23, 2008. On the bad news front, the FDIC "accused the management of OneUnited Bank, one of the largest black-owned banks in the country, of running an unsound lending operation and ordered a top-to-bottom review of executive perks that included a 2008 Porsche and a housing allowance for a beach-front home in California." Wow. Ouch.

Below, we feel, are the best minority owned banks in the US (as of 6/30/08): LIBERTY BANK & TRUST CO, New Orleans, LA (Black) INDUSTRIAL BANK, Washington, DC (Black) MECHANICS & FARMERS BANK, Durham, NC (Black) CITIZENS SECURITY BK GQ INC, Guam, GU (Asian) CENTRAL BANK OF KANSAS CITY, Kansas City, MO (Women) BROADWAY FEDERAL BANK F S B, Los Angeles, CA, (Black) BANCO SANTANDER PUERTO RICO, San Juan, PR (Hispanic) UNITED BANK OF PHILADELPHIA, Philadelphia, PA, (Black) CARVER STATE BANK, Savannah, GA, (Black) NORTH MILWAUKEE STATE BANK, Milwaukee, WI (Black) Yes, we know there are a lot of Black-owned banks on the list. Here's why: Black banks have always had relatively higher levels of nonperforming loans, so they know better (than, say WAMU) how to survive with these types of loans on the books. We think this skill will serve them well in the current credit cycle. Thus, they are rated a little higher than other minority banks. We think smaller banks will do well over this ...

By Bonnie McGeer, American Banker | Wednesday, April 9, 2008 United Bank of Philadelphia must strengthen its management, board oversight, and loan policies under a cease-and-desist order that the Federal Deposit Insurance Corp. disclosed Tuesday. The $75 million-asset African-American-owned bank has been operating with insufficient earnings and capital, according to the Jan. 23 order. United posted a $1,000 fourth-quarter profit and reported a core capital leverage ratio of 9.99%, according to FDIC data. The order also says the bank has been violating regulations on loans made to officers, directors, and shareholders, and engaging in unsafe banking practices. It requires United to establish an adequate allowance for loan losses, enhance loan documentation, reduce delinquent loans, have an active audit committee made up solely of outside directors, cut expenses, and write a strategic plan for improving its earnings. United, which had a ratio of noncurrent loans to loans of 4% at yeare...

According to Bloomberg , "The Federal Bureau of Investigation is investigating 14 corporations for possible accounting fraud and other crimes related to the subprime lending crisis, officials said. Neil Power, chief of the FBI's economic crimes unit, wouldn't identify the companies, though he said the cases involve 'valuation-type stuff.'" We warned about these problems in 1991. In 2001 , we worked to create the first investment vehicle designed to address subprime lending problems. Fraudulent valuation is a key component in predatory home mortgage lending. A key question concerns the lack of early warning from the Federal Reserve Board's Consumer Advisory Council : "The Consumer Advisory Council was established in 1976 at the direction of the Congress to advise the Federal Reserve Board on the exercise of its duties under the Consumer Credit Protection Act and on other consumer-related matters.The council membership represents interests of consumers,...