This Week in ESG and Impact Investing

The Securities and Exchange Commission voted this morning to adopt changes to the federal proxy and other rules to facilitate director nominations by shareholders by allowing shareholders to more easily nominate directors to corporate boards. This will definitely change the balance of power between general investors and management at many U.S. companies. This is the fourth time the SEC considered questions about proxy access over the past few years. The Dodd-Frank Wall Street Reform and Consumer Protection Act finally confirmed the Commission’s authority to resolve the issue. “The proxy is often the principal means for shareholders and public companies to communicate with one another, and for shareholders to weigh in on issues of importance to the corporation,” said SEC Chairman Mary L. Schapiro. The rule was passed on a 3-2 vote, with two Republican commissioners, Troy Paredes and Kathleen Casey, opposing. “The rule is fundamentally and fatally flawed, and it will have great diff...

Much recent attention has focused on Section 342 of the Financial Reform Bill ( Dodd -Frank Bill). The section calls for the creation of Offices of Minority and Women Inclusion at all Federal financial institution regulatory agencies. While most blog comments on the Section have been negative, there has been a lack of accurate information about just what this section calls for and why. Let's start with why. As we noted in 2003 and 2006 : "Envy, hatred, and greed have flourished in certain capital market institutions, propelling ethical standards of behavior downward. Without meaningful reform, there is a small (but significant and growing) risk that our economic system will simply cease functioning." (2003); and "Individuals and market institutions with the power to safeguard the system, including investment analysts and rating agencies, have been compromised. Few efficient, effective and just safeguards are in place. Statistical models created by the firm show the p...

Sponsored by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision (The Agencies), the Joint Public Hearing on the Community Reinvestment Act Regulation was held in Arlington Virginia on July 19, 2010. We provided testimony for the hearings. Congress passed the Community Reinvestment Act (CRA) in 1977 “to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderate income neighborhoods, consistent with safe and sound operations.” Our testimony follows a series of warnings we have issued since 1998: - In an October 1998 brief filed with the Court of Appeals for the District of Columbia Circuit, we objected to the Citigroup/Travelers merger. We cited evidence that growing financial market malfeasance greatly exacerbated risks in financial markets, reducing the safety and soundness of large f...

An article by Ling-Ling Wei in today's Wall Street Journal noted that: "A partnership between Tom Barrack's Colony Capital LLC and a minority-owned investment firm won the bidding for a $1.85 billion portfolio of distressed commercial real-estate loans auctioned off by the Federal Deposit Insurance Corp. The deal, the second-largest bulk sale of commercial-property debt under a public-private partnership, is expected to be announced Wednesday by the FDIC. This deal is the first public-private setup in which a minority-owned firm has taken a stake, albeit a small one, during this economic downturn. Cogsville, an African-American-owned firm, contributed $16 million to the $218 million investment, for a 7% stake in the portfolio. Over the past year, there have been complaints on Capitol Hill and among smaller financial firms, especially those owned by minorities and women, about the lack of minority-firm participation in various public-private investment programs. 'A lot...

According to the FDIC, "On Friday, July 9, 2010, Ideal Federal Savings Bank, Baltimore, MD was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed. As a convenience to local depositors, the FDIC has made arrangements for the insured funds in demand accounts, savings accounts, NOW accounts, insured CD's, and any other transactional accounts to be transferred to the Manufacturers and Traders Trust Company ("M&T") located at 715 N. Howard Street, Baltimore, Maryland. M&T Bank will also accept the failed bank's direct deposits from the federal government, such as Social Security and Veterans' payments through Saturday, September 4." The institution was established as Ideal Federal Savings Bank on April 4, 1920. As one of the original Black owned financial institution in the United States, the bank had a stor...

MinorityFinance.com is pleased to announce the publication of the Minority and Women-owned Company Small Business Financing Guide and Workbook, 2010 Edition . The Guide and Workbook are designed to provide actionable information minorities and women can use to obtain small business financing. The Guide and Workbook consists of two sections: The Guide provides detailed business financing information of specific relevance to Minority and Women-owned Businesses. The Workbook is an electronic document with blank loan applications, grant forms, business planning and financial reporting templates, IRS Forms and other documents. The Guide and Workbook will be of specific interest to those seeking to finance a new firm and/or start-up. It has special sections on financing a Day Care Center, financing a Beauty/Hair Salon, financing a Music/Film business. Specific sections of the Workbook provide detailed information on: How to complete a Bank Loan Application (completed sample application inclu...

Creative Investment Research, Inc. issued comments for the Small Business Federal Contracting Forum public meeting to be held on Monday, June 28, 2010. The purpose of the meeting is to encourage public comment on small business issues. On April 26, 2010, President Obama established an Interagency Task Force to develop proposals and recommendations for enhancing the use of small businesses in Federal contracting, including businesses owned by women, minorities, socially and economically disadvantaged individuals, and service-disabled veterans of our Armed Forces. The Memorandum establishing the Task Force is available here . Creative Investment has long been familiar with the problems that small and minority businesses encounter when attempting to contract with the federal government. We reviewed our experiences in our comments. In addition, we noted which Federal agencies are doing the best job in their small business outreach strategies. We noted that doing business with the Federal...