United Bank's Emma Chappell won over 3,000 small investors
In 1992, Emma C. Chappell founded United Bank of Philadelphia, after an epic five-year effort. It was the first African-American-owned bank the city had seen in 35 years. Today, the bank is considered a leader in lending to minorities, and Chappell, the bank's chairman, president, and chief executive officer, has made it a priority to give other black entrepreneurs a leg up. (See Business Week frontier Online, "A Black Entrepreneur in Banking Gives Others a Break," June 30, 1999). How did she do it? First of all, Chappell won't take "no" for an answer. And she has heard the word plenty often as an African-American woman who started a bank. "I am one person who hates to fail. So if I say I am going to do something, I am going to put all of my time and energy into making it happen," she says.
Chappell started her career as a clerk-photographer for Continental Bank (now part of PNC Bank), one of Philadelphia's largest financial institutions. She worked there for more than 30 years, moving up the ranks. She was the first woman to go through its executive training program and finally became vice-president of the community business loan and development department.
In 1984, Reverend Jesse Jackson tapped her to become treasurer of his Presidential campaign. She took a three-year leave of absence from the bank to work with him, helping to found Operation PUSH, a nonprofit organization dedicated to achieving financial equality for minorities, and then acting as the first vice-president for administration of the National Rainbow Coalition.
But banking lured Chappell back from politics. In 1987, while she was still in Washington, a group of Philadelphia businessmen, bankers, and lawyers approached her with the idea of forming a minority-owned bank in the city. They showed her a 1987 survey with these sobering statistics: Six major banks in Philadelphia had lent about $387 million locally for mortgages. Of that, less than $8 million went to minorities, and less than $2 million to women. "We could not believe it," Chappell says. "The sad part is if you look at most of these minority communities, most of the households are headed up by women." Chappell said the study convinced her that Philadelphia needed a bank that had the community's interests at heart. She set out to create one.
It was a bad year to try to found a bank. In October, 1987, the stock market crashed, and Chappell's financial supporters vanished. "In the meantime, I had put my name out there. I had gone out to the community, been on talk shows, been in the churches, and to the people I knew," Chappell says. "I started drumming up the idea of: 'If we could get a bank going, would you support it?' and they all had said, 'Yes, you do it, and we will support you.'"
The harsh effects of the early 1990s recession on the African-American community in Philadelphia only hardened Chappell's resolve. She decided not to pursue large investors for capital. Instead, she turned to the community. Over the next two years, she set up the bank's structure and sold shares to 3,000 black investors, in $500 blocks.
By 1989, Chappell says she raised $3 million, the amount Pennsylvania regulators told her she needed to capitalize the bank. "But then as I got to Harrisburg...to tell them: 'Here is our business plan, and I have $3 million in the bank,' they told me it wasn't enough, that I needed $5 million. And that is when my heart really sunk." The rationale? Chappell says racism may have been a factor. Another possibility: The savings and loan crisis, and the spectacle of so many small banks failing, may have chilled regulators to the plan. "They never gave a reason, other than to say it was a different economy, so you need more money to start," says Chappell. It took her another year, but she raised an additional $3 million, this time from big investors -- $1 million more than the regulators had demanded.
Shortly after its opening, the bank acquired six more branches -- failed savings and loans in other minority neighborhoods in Philadelphia -- which it bought from the Resolution Trust Corp. "My mission has been to maintain banking services in these underserved neighborhoods, which then allows for the economic viability of those neighborhoods," Chappell says. Today, the bank has assets of $122 million. Its efforts to promote other entrepreneurs include business education and a hands-on approach to lending to them. The bank doesn't just lend to local small-business people. It works closely with them to make sure they have suitable business plans and that they manage their finances properly.
The bank has had its own financial ups and downs in the process. In 1998, the bank's net income fell 94%, to a minuscule $10,000, because a $1 million-plus loan ran into trouble, forcing the bank to increase its loan-loss reserves. The situation has since turned around, says Chappell, who projects 1999 net income at $361,000.
She remains a high-profile figure. Last year, she accompanied President Clinton and the First Lady to Africa, where Chappell says she met with bankers and members of chambers of commerce. In June, she received the Blue Chip Enterprise Initiative Award of the U.S. Chamber of Commerce, which honors small-business owners who have overcome adversity to create opportunities for themselves and their communities. The bank's mission, Chappell says, is "about leveling the playing field and letting people earn money to fulfill their dreams." The most important lesson of her years as an entrepreneur and a banker? Perseverance. "That has been my success," she says. And it's a quality she exemplifies.
By Jeremy Quittner in New York
jeremy_quittner@businessweek.com A Slave's Daughter Was the First Black Woman Bank Founder in the U.S.
Friday, September 11, 2009
Thursday, September 3, 2009
De Novo Bank Application Process
De Novo Bank Application Process
Videos for this Topic
The Importance of Your First Location
View Transcript
Governance Issues for Native American Institutions
View Transcript
Sections in this Topic
Overview
The Charter Decision
Pre-Filing Contact
The Charter and FDIC Insurance Application
What Regulators Look For
Holding Company Formations
Fees to Consider
Public Nature of Applications
Required Stock Subscription for Member Banks
Reference
Main page for Start a Bank
Related Resource
Processing of De Novo Bank Membership Applications
Overview
Bank organizers have several options from which to choose when forming their bank. This topic discusses these options, which depend significantly on the organizers' vision for the institution.
The Charter Decision
There are several decisions to make when considering a new charter. One choice is whether the depository institution will be a commercial bank or a savings bank/association. Another is whether it is to be state or federally chartered.
If an institution chooses a commercial bank charter, the decision is whether to apply for a national bank charter from the Office of the Comptroller of the Currency (OCC) or a state bank charter from the state regulatory authority. Commercial banks with a national charter are supervised by the OCC and are members of the Federal Reserve System. Commercial banks with a state charter are supervised by both the applicable state banking department and either the Federal Deposit Insurance Corporation (FDIC) for state nonmember banks or the Federal Reserve for state member banks.1
If an institution chooses a savings bank/association charter, the decision is whether to be a state-chartered savings association, primarily regulated by the state, or a federal savings bank/association, primarily regulated by the Office of Thrift Supervision (OTS).
Important points to consider when choosing a charter include the following:
Regulatory quality—Does the supervisory process add value?
How accessible and responsive to inquiries is the supervisor?
What supervisory costs are associated with the charter (e.g., application fees, examination charges, etc.)?
What powers, rights, and privileges are conferred by the charter?
Pre-Filing Contact
Although filing required applications is the official start of the regulatory application process, it should not be the first step of the process. Organizers of new banks are strongly encouraged to contact bank regulators prior to filing the required applications. Pre-filing contact, in the form of a meeting or telephone conference with key organizers and supervisors, provides a forum for organizers to obtain specific instructions regarding the application process and filing requirements. Further, whether the de novo will operate with a minority focus or operate generally, the organizers will benefit from guidance regarding access to capital, organizing boards of directors, and regulatory expectations. Insight into these areas may improve strategic decisions, reduce costs, and speed the application process. Regulators can also provide feedback regarding potential issues related to specific charter proposals. For example, pre-filing contact allows for identification of any issues that might be revealed through advance background checks of the organizers, analysis of initial capital adequacy, and study of management's business plan for reasonableness.
In the past, some MOI and de novo organizers have faced challenges during the chartering process that could have been prevented by pre-filing contact with bank regulators. Early recognition of issues allows them to be addressed before submission of the application, facilitating efficient processing of the application.
The Charter and FDIC Insurance Application
The Interagency Charter and Federal Deposit Insurance Application (interagency form) is a combined interagency form issued by the OCC, the OTS, and the FDIC. This form helps to eliminate duplicative information requests by consolidating the reporting requirements of the above-mentioned regulatory agencies into one uniform document.
All three agencies use the interagency form, regardless of the type of charter under consideration. However, the decision to grant or deny the charter application is independent of the decision to grant or deny deposit insurance. Further, depending on the chartering agency (i.e., OCC, OTS, or the state) and membership status (i.e., Federal Reserve member or nonmember), additional applications may be required by the appropriate state agency and the Federal Reserve, respectively. Regardless of membership status, state-chartered banks must file a separate charter application with the appropriate state banking agency, in addition to the interagency form. The Federal Reserve is in the process of changing the policy to allow one combined application to be filed. Further, for a Federal Reserve state member bank, a separate membership application (Form 2083 A/B/C) must also be filed, after preliminary charter approval is granted by the appropriate state chartering agency.
What Regulators Look For
When a regulator reviews new bank applications, the primary objective is to ensure compliance with laws, regulations, and supervisory policy. For instance, certain factors must be given special consideration in approving de novo bank applications, including managerial factors, financial factors, capital adequacy, and convenience and need.
Managerial factors address the competence, experience, integrity, and financial ability of the institution's organizers and management. Financial factors address the viability of the business plan and the ability to achieve and maintain profitability. Capital adequacy addresses the bank's capital in the context of its future growth and earnings prospects, verifying that the bank is raising the required capital. Convenience and need address how the bank plans to serve the financial services needs of the community.
Holding Company Formations
Along with chartering decisions, organizers should consider whether to have a bank holding company take ownership of their bank or remain independent. Bank holding companies allow banks to more easily expand geographically; to move into other product markets (nonbanking activities); and to obtain greater tax benefits and financial flexibility, thereby avoiding some of the constraints imposed by regulation, including limitations on leverage, the types of assets that can be acquired, and liabilities that can be issued.
Bank holding company formations and supervision are the responsibility of the Federal Reserve. The Federal Reserve has adopted, and continues to follow, the principle that bank holding companies should serve as a source of managerial and financial strength for their subsidiary banks. A separate application is needed to form a holding company. This application can be filed in conjunction with the charter application or at a later date.
Fees to Consider
There are direct regulatory costs to consider when chartering a new bank. These fees include charter fees, application fees, and ongoing supervision fees. Charter fees are a one-time charge, assessed when the bank is initially chartered. Application fees are associated with any subsequent application filed, including charter conversions, branching, purchase and assumption, merger/acquisition, and change in control applications. Supervision fees, or assessments, are charged for ongoing regulatory examinations.
While OCC fees are uniform across states, state fees vary from state to state and are generally lower than OCC fees. The Federal Reserve does not charge any fees. Although the FDIC does not charge fees, insurance premiums are imposed in connection with FDIC insurance.
Public Nature of Applications
In contrast to many other aspects of the supervisory process, the applications process is a very public function. Federal regulations require that notice of certain proposals be published in a newspaper of general circulation in the communities that will be affected by a banking proposal to allow the general public an opportunity to comment on the proposal. The public is notified upon receipt of certain types of applications, and the application itself is considered a public document available for review upon request (confidentiality can be requested for private information). Further, the outcome of the application is also made public.
Although the Federal Reserve membership application does not require newspaper publication, the action taken on such applications is still made available to the public.
Required Stock Subscription for Member Banks
As a condition of membership in the Federal Reserve, member banks (both state- and OCC-chartered) are required to subscribe to stock in their District's Federal Reserve Bank. The required subscription is equal to 6 percent of the bank's capital and surplus; 3 percent must be paid in, and the remaining 3 percent is subject to call by the Board of Governors of the Federal Reserve.
Holding stock in a Federal Reserve Bank does not carry with it the typical control and financial interest conveyed to holders of common stock in for-profit organizations. The stock may not be sold or pledged as collateral for loans; it is merely a legal obligation required with membership. Annually, member banks will receive a 6 percent dividend on their stock, as specified by law, and they can vote for some of the directors (class A and class B directors) of their Reserve Bank.
Reference
The word "member" refers to Federal Reserve System membership. A state nonmember bank is a state-chartered bank that has chosen not be a Federal Reserve System member. A state member bank is a state-chartered bank that has chosen to be a member of the Federal Reserve.
Videos for this Topic
The Importance of Your First Location
View Transcript
Governance Issues for Native American Institutions
View Transcript
Sections in this Topic
Overview
The Charter Decision
Pre-Filing Contact
The Charter and FDIC Insurance Application
What Regulators Look For
Holding Company Formations
Fees to Consider
Public Nature of Applications
Required Stock Subscription for Member Banks
Reference
Main page for Start a Bank
Related Resource
Processing of De Novo Bank Membership Applications
Overview
Bank organizers have several options from which to choose when forming their bank. This topic discusses these options, which depend significantly on the organizers' vision for the institution.
The Charter Decision
There are several decisions to make when considering a new charter. One choice is whether the depository institution will be a commercial bank or a savings bank/association. Another is whether it is to be state or federally chartered.
If an institution chooses a commercial bank charter, the decision is whether to apply for a national bank charter from the Office of the Comptroller of the Currency (OCC) or a state bank charter from the state regulatory authority. Commercial banks with a national charter are supervised by the OCC and are members of the Federal Reserve System. Commercial banks with a state charter are supervised by both the applicable state banking department and either the Federal Deposit Insurance Corporation (FDIC) for state nonmember banks or the Federal Reserve for state member banks.1
If an institution chooses a savings bank/association charter, the decision is whether to be a state-chartered savings association, primarily regulated by the state, or a federal savings bank/association, primarily regulated by the Office of Thrift Supervision (OTS).
Important points to consider when choosing a charter include the following:
Regulatory quality—Does the supervisory process add value?
How accessible and responsive to inquiries is the supervisor?
What supervisory costs are associated with the charter (e.g., application fees, examination charges, etc.)?
What powers, rights, and privileges are conferred by the charter?
Pre-Filing Contact
Although filing required applications is the official start of the regulatory application process, it should not be the first step of the process. Organizers of new banks are strongly encouraged to contact bank regulators prior to filing the required applications. Pre-filing contact, in the form of a meeting or telephone conference with key organizers and supervisors, provides a forum for organizers to obtain specific instructions regarding the application process and filing requirements. Further, whether the de novo will operate with a minority focus or operate generally, the organizers will benefit from guidance regarding access to capital, organizing boards of directors, and regulatory expectations. Insight into these areas may improve strategic decisions, reduce costs, and speed the application process. Regulators can also provide feedback regarding potential issues related to specific charter proposals. For example, pre-filing contact allows for identification of any issues that might be revealed through advance background checks of the organizers, analysis of initial capital adequacy, and study of management's business plan for reasonableness.
In the past, some MOI and de novo organizers have faced challenges during the chartering process that could have been prevented by pre-filing contact with bank regulators. Early recognition of issues allows them to be addressed before submission of the application, facilitating efficient processing of the application.
The Charter and FDIC Insurance Application
The Interagency Charter and Federal Deposit Insurance Application (interagency form) is a combined interagency form issued by the OCC, the OTS, and the FDIC. This form helps to eliminate duplicative information requests by consolidating the reporting requirements of the above-mentioned regulatory agencies into one uniform document.
All three agencies use the interagency form, regardless of the type of charter under consideration. However, the decision to grant or deny the charter application is independent of the decision to grant or deny deposit insurance. Further, depending on the chartering agency (i.e., OCC, OTS, or the state) and membership status (i.e., Federal Reserve member or nonmember), additional applications may be required by the appropriate state agency and the Federal Reserve, respectively. Regardless of membership status, state-chartered banks must file a separate charter application with the appropriate state banking agency, in addition to the interagency form. The Federal Reserve is in the process of changing the policy to allow one combined application to be filed. Further, for a Federal Reserve state member bank, a separate membership application (Form 2083 A/B/C) must also be filed, after preliminary charter approval is granted by the appropriate state chartering agency.
What Regulators Look For
When a regulator reviews new bank applications, the primary objective is to ensure compliance with laws, regulations, and supervisory policy. For instance, certain factors must be given special consideration in approving de novo bank applications, including managerial factors, financial factors, capital adequacy, and convenience and need.
Managerial factors address the competence, experience, integrity, and financial ability of the institution's organizers and management. Financial factors address the viability of the business plan and the ability to achieve and maintain profitability. Capital adequacy addresses the bank's capital in the context of its future growth and earnings prospects, verifying that the bank is raising the required capital. Convenience and need address how the bank plans to serve the financial services needs of the community.
Holding Company Formations
Along with chartering decisions, organizers should consider whether to have a bank holding company take ownership of their bank or remain independent. Bank holding companies allow banks to more easily expand geographically; to move into other product markets (nonbanking activities); and to obtain greater tax benefits and financial flexibility, thereby avoiding some of the constraints imposed by regulation, including limitations on leverage, the types of assets that can be acquired, and liabilities that can be issued.
Bank holding company formations and supervision are the responsibility of the Federal Reserve. The Federal Reserve has adopted, and continues to follow, the principle that bank holding companies should serve as a source of managerial and financial strength for their subsidiary banks. A separate application is needed to form a holding company. This application can be filed in conjunction with the charter application or at a later date.
Fees to Consider
There are direct regulatory costs to consider when chartering a new bank. These fees include charter fees, application fees, and ongoing supervision fees. Charter fees are a one-time charge, assessed when the bank is initially chartered. Application fees are associated with any subsequent application filed, including charter conversions, branching, purchase and assumption, merger/acquisition, and change in control applications. Supervision fees, or assessments, are charged for ongoing regulatory examinations.
While OCC fees are uniform across states, state fees vary from state to state and are generally lower than OCC fees. The Federal Reserve does not charge any fees. Although the FDIC does not charge fees, insurance premiums are imposed in connection with FDIC insurance.
Public Nature of Applications
In contrast to many other aspects of the supervisory process, the applications process is a very public function. Federal regulations require that notice of certain proposals be published in a newspaper of general circulation in the communities that will be affected by a banking proposal to allow the general public an opportunity to comment on the proposal. The public is notified upon receipt of certain types of applications, and the application itself is considered a public document available for review upon request (confidentiality can be requested for private information). Further, the outcome of the application is also made public.
Although the Federal Reserve membership application does not require newspaper publication, the action taken on such applications is still made available to the public.
Required Stock Subscription for Member Banks
As a condition of membership in the Federal Reserve, member banks (both state- and OCC-chartered) are required to subscribe to stock in their District's Federal Reserve Bank. The required subscription is equal to 6 percent of the bank's capital and surplus; 3 percent must be paid in, and the remaining 3 percent is subject to call by the Board of Governors of the Federal Reserve.
Holding stock in a Federal Reserve Bank does not carry with it the typical control and financial interest conveyed to holders of common stock in for-profit organizations. The stock may not be sold or pledged as collateral for loans; it is merely a legal obligation required with membership. Annually, member banks will receive a 6 percent dividend on their stock, as specified by law, and they can vote for some of the directors (class A and class B directors) of their Reserve Bank.
Reference
The word "member" refers to Federal Reserve System membership. A state nonmember bank is a state-chartered bank that has chosen not be a Federal Reserve System member. A state member bank is a state-chartered bank that has chosen to be a member of the Federal Reserve.
Firsthaitianownedbank
The current economic crises have had major effects in every sector of the economy especially the banking industry. While these effects have brought down many institutions that are vital for economic growth and development, business leaders must continue to develop new ways and ideas that foster growth in our economy. Ben Bernanke, chairman of the Federal Reserve board, speaks at the global financial literacy summit, Washington D.C on June 17, 2009 about community development financial institutions challenges and opportunities, where he states the importance of financial literacy and financial education has never been more important or evident.
Community bank plays a vital role in community development!!!!
Minority owned banks focused on community development have many advantages, yet minority groups either don’t know how to form a community bank or believe that the capital requirement is unachievable. The Federal regulators along with state regulators provide several types of financial assistance to minority owned bank or group desiring to open a bank to meet the credit needs of the community in which they serve.
As a community bank, you could qualify as a community development financial institution, whereby you would be entitled to find funds from the treasury department as well as attracting several type of low funds investment. You can also be part of the Federal home loan bank under a provision of the Federal Housing and community development act section 8.
As a community bank, your focus is to help develop the community in which you operate and facilitate small business investment and provide non-traditional banking services to your customers: including determining a new risk rating based on other factors to determine eligibility for financial products such home loans, auto loans and other.
You can provide one stop financial services to your customers and non-customers such check cashing, bill payment, phone card and other financial service. As a community bank fostering economic growth also include financial education programs where by teaching people to be more financially responsible, the importance of creating and maintaining good credit, how to save for child education.
Only if minority group knew how to take advantage of their purchasing power, they could change their lives as well as the lives of the people in their community. All and all, the most important thing is education and the need to support each other through community banking, such a way will lead to economic development and growth and higher standards of living.
I currently work for a regional accounting firm in the downtown Miami area and I specialize in financial institutions. I believe that it is about time that we the Haitian community join hands together to open the firsthaitianownedbank as a community development bank to serve and meet the credit needs of our people; however, the strategy should be bold enough to not only serve the Haitian community but also surrounding communities. Current analysis shows the need to provide support to many small businesses that are considered undercapitalized and could potentially grow, yet if the financial support is not available, economic growth can not occur.
I must state that our current strategy is to open our first community bank focusing on low to moderate income communities in the North Miami Beach, FL area and to grow across the united state as a national bank. This blog is being posted here in search of support especially in the Miami, Fl area so that we can build a strong management team to help execute the business plan as written once we file the application and obtain approval from the regulators. I Hope to read from you and read your comments. if you are interested in knowing or being part of the organizing team please state so in your comments. To become a director or an officer of the bank will require specific qualifications; however, you can always become a stockholder!!!!!!!!!!!
Community bank plays a vital role in community development!!!!
Minority owned banks focused on community development have many advantages, yet minority groups either don’t know how to form a community bank or believe that the capital requirement is unachievable. The Federal regulators along with state regulators provide several types of financial assistance to minority owned bank or group desiring to open a bank to meet the credit needs of the community in which they serve.
As a community bank, you could qualify as a community development financial institution, whereby you would be entitled to find funds from the treasury department as well as attracting several type of low funds investment. You can also be part of the Federal home loan bank under a provision of the Federal Housing and community development act section 8.
As a community bank, your focus is to help develop the community in which you operate and facilitate small business investment and provide non-traditional banking services to your customers: including determining a new risk rating based on other factors to determine eligibility for financial products such home loans, auto loans and other.
You can provide one stop financial services to your customers and non-customers such check cashing, bill payment, phone card and other financial service. As a community bank fostering economic growth also include financial education programs where by teaching people to be more financially responsible, the importance of creating and maintaining good credit, how to save for child education.
Only if minority group knew how to take advantage of their purchasing power, they could change their lives as well as the lives of the people in their community. All and all, the most important thing is education and the need to support each other through community banking, such a way will lead to economic development and growth and higher standards of living.
I currently work for a regional accounting firm in the downtown Miami area and I specialize in financial institutions. I believe that it is about time that we the Haitian community join hands together to open the firsthaitianownedbank as a community development bank to serve and meet the credit needs of our people; however, the strategy should be bold enough to not only serve the Haitian community but also surrounding communities. Current analysis shows the need to provide support to many small businesses that are considered undercapitalized and could potentially grow, yet if the financial support is not available, economic growth can not occur.
I must state that our current strategy is to open our first community bank focusing on low to moderate income communities in the North Miami Beach, FL area and to grow across the united state as a national bank. This blog is being posted here in search of support especially in the Miami, Fl area so that we can build a strong management team to help execute the business plan as written once we file the application and obtain approval from the regulators. I Hope to read from you and read your comments. if you are interested in knowing or being part of the organizing team please state so in your comments. To become a director or an officer of the bank will require specific qualifications; however, you can always become a stockholder!!!!!!!!!!!
Friday, August 28, 2009
Collective Economics Project
Leveraging purchasing power of low-income to moderate income communities for collective gain!!!
Details coming soon!!!
Details coming soon!!!
Do you know what 25,000 Caribbean Americans can do together if we collectively agree to do something?
More details coming soon!!!! but share your thoughts
Have you ever thought of opening a business? what type of business would you like to open? share your thoughts with me...I would like to know!!!
More details to be posted later, but I would like to read what you think...
Let’s redirect our collective buying power to open South Florida First Community Development and Environmental Banking Corporation.
My hope while writing this blog is that I would be able to channel your thinking to believe that what may seems impossible for one person is absolutely doable for a group if they become sensibly aware of the power that they possess together. We often hear the term buying power in the context of one’s ability to use their current value of available cash in relation to the quality and quantity of products that can purchased using those available assets, but in terms of investing, buying power normally refers to the value of money that is available for use in the purchase of securities on margin. Essentially, the use of the term "buying power" has to do with the ability of a consumer to use liquid assets to purchase the desired quantity and quality of products that will meet current wants and needs. Basically, when aggregating the buying power of one or more consumers, you would begin to increase the underlying ability of the group to create what is called collective buying power.
From an economic perspective, collective buying power is significant and has multi-dimensional aspects to it whereby it can viewed as a group’s ability to control or to dictate economic growth and development, business success or failure or even market’s structure. A clear example of the latter is when a group of consumers come together using the old rule of thumb, there's power in numbers, to leverage the group size in exchange for discounts. For example, Universal Dental Plan provider “UDP” has stepped in to play the middle person to negotiate dental discounts on behalf of its members acrossMassachusetts.
The aggregate number of consumers banking with for example Bank of America, like some other larger banks, creates a power house through which a significant number of goods and services are acquired; this happens every time you use a credit card or a debit card; every time you make a deposit and borrows money from the bank. Ultimately, Bank of America through the use of your buying power have been able to provide wealth management services to high net worth individuals, have been able to provide services to mid-market business, corporate banking and other large business entities. At this point, my question becomes:
Can your buying power be used to support collective purchasing power that is more in line with your core values and beliefs?
Many can argue that their existing banking relationship is mutually beneficial and practically reflexible in the sense that consumers are offered various financial flexibility, their credit needs are met while the bank provides shareholders’ value by being profitable.
On the other hand, I want to argue as Caribbean living in South Florida primarily in the service areas of Miami, North Miami Beach, Miami Shores, Miramar and the surrounding communities, we can redirect our buying power to collectively purchase and to provide the area’s FIRST COMMUNITY DEVELOPMENT AND ENVIRONMENTAL BANKING CORPORATION, committed to building vibrant communities and a healthy environment through a triple bottom line strategy:
Our triple bottom line success can be measured and evaluated as follows:
a) Traditional financial performance
b) The dollars: we invest in our own communities, in minority-owned businesses, faith-based and other not-for-profit organizations, which we will call “community development investment.”
c) The dollars: we loan to finance activities that contribute to a healthier environment, such as building renovation that reduce energy and resource consumption or sustainable business practices, which will call “conservative loans.”
First, let me define community development banking: As a community development banking we can use traditional banking services to revitalize various communities by spurring the redevelopment of real estate, financing business growth, helping residents build their own wealth, and encouraging new services while offering:
Opportunities for socially motivated people and organizations to make deposit that support community development and conservation ( Green deposits)
Money management and financial literacy classes
Financing to purchase and renovate apartment buildings (real estate loans)
Business loans and cash management services (business banking)
Loans, deposits and cash management services specifically designed for faith based and other not-for-profit organizations (non-profit banking)
Savings, checking, CD and IRA accounts (consumer banking or retail banking services
One stop financial services center: Faxing, check cashing, bill payments, money orders
Loans that contribute to a healthier environment by reducing energy consumption, rebuilding on vacant or contaminated sites, reusing existing structures or that support “green” businesses (conservation loans,, environmental banking).
*** P.S Shorebank is the country’s first community development bank. It began in 1973, when its founders acquired a bank in a declining neighborhood on Chicago’s South Side to demonstrate that banks can be powerful tools for positive community change ***
Second, let me state the following:
Communities can not achieve economic prosperity if entrepreneurial activities and residents’ health are compromised by toxins in the land, air and water, or if natural resources are consumed in an unsustainable way. Therefore, to build strong sustainable communities, we must also focus on environmental issues.
Now it is up to us to decide whether we can bring our collective buying power to institutionalize a corporation that will do both providing us with various choices of financial services while providing a return to our investments and practice safe, sound and conservative lending policies that will meet the credit needs and financial growth and development of our communities while promoting environmentally friendly practices.
How do we address environmental issues?
By adopting sound conservation principles for our own operations – reducing energy and paper consumption, reducing and recycling our waste and buying products made of recycled materials.
By providing information to customers that show how their choices have long term environmental impact. Homeowners, if they know how, can reduce their electric and gas usage, benefiting their pocketbooks as well as the environment. Businesses, if they know how, can also reduce their energy consumption, waste and potentially their use of toxic chemicals.
By providing financing for physical improvement that benefit the environment. These physical improvements can include building modifications, equipment upgrades and restoring vacant building to community by revitalizing its real estate, leading to improve perceptions and higher property values.
How do we support community development investment?
By providing residential real estate loans that strengthen communities, providing affordable housing and build borrowers’ wealth.
Loans to small businesses and faith based and nonprofit organization that create jobs and expand community services.
Conservation loans for projects that reduce energy consumption, remediate contamination, or support green business practices.
Bank deposit and retail services.
How do we come up with the capital requirements needed to institute such an operation?
Once we get to the private offering of shares of the Corporation, my hope is that a good number of us Caribbean will come together to collectively combine our buying power to raise approximately $10,000,000. In order to have certain tax benefits and other governmental support, the Corporation must be minority owned and I want to first give the opportunity for people in the community, black owned small businesses, faith based organization, other minority owned businesses, and friends and families to buy the shares. Alternatively, there are several other organizations that support this type of initiative: a) Center for Financial Services Innovation is a nonprofit corporation that provides investment capital to such start-up. b) National Community Investment Fund (NCIF) is an independent charitable trust that invests in banks that generate both financial and social returns. c) Northern Initiative, a non profit organization that also invest in such venture. d) Many large banks or financial institutions see this type of venture as a way to support their community reinvestment act examination.
See my blog on how to finance a community development bank for more details
From an economic perspective, collective buying power is significant and has multi-dimensional aspects to it whereby it can viewed as a group’s ability to control or to dictate economic growth and development, business success or failure or even market’s structure. A clear example of the latter is when a group of consumers come together using the old rule of thumb, there's power in numbers, to leverage the group size in exchange for discounts. For example, Universal Dental Plan provider “UDP” has stepped in to play the middle person to negotiate dental discounts on behalf of its members acrossMassachusetts.
The aggregate number of consumers banking with for example Bank of America, like some other larger banks, creates a power house through which a significant number of goods and services are acquired; this happens every time you use a credit card or a debit card; every time you make a deposit and borrows money from the bank. Ultimately, Bank of America through the use of your buying power have been able to provide wealth management services to high net worth individuals, have been able to provide services to mid-market business, corporate banking and other large business entities. At this point, my question becomes:
Can your buying power be used to support collective purchasing power that is more in line with your core values and beliefs?
Many can argue that their existing banking relationship is mutually beneficial and practically reflexible in the sense that consumers are offered various financial flexibility, their credit needs are met while the bank provides shareholders’ value by being profitable.
On the other hand, I want to argue as Caribbean living in South Florida primarily in the service areas of Miami, North Miami Beach, Miami Shores, Miramar and the surrounding communities, we can redirect our buying power to collectively purchase and to provide the area’s FIRST COMMUNITY DEVELOPMENT AND ENVIRONMENTAL BANKING CORPORATION, committed to building vibrant communities and a healthy environment through a triple bottom line strategy:
Our triple bottom line success can be measured and evaluated as follows:
a) Traditional financial performance
b) The dollars: we invest in our own communities, in minority-owned businesses, faith-based and other not-for-profit organizations, which we will call “community development investment.”
c) The dollars: we loan to finance activities that contribute to a healthier environment, such as building renovation that reduce energy and resource consumption or sustainable business practices, which will call “conservative loans.”
First, let me define community development banking: As a community development banking we can use traditional banking services to revitalize various communities by spurring the redevelopment of real estate, financing business growth, helping residents build their own wealth, and encouraging new services while offering:
Opportunities for socially motivated people and organizations to make deposit that support community development and conservation ( Green deposits)
Money management and financial literacy classes
Financing to purchase and renovate apartment buildings (real estate loans)
Business loans and cash management services (business banking)
Loans, deposits and cash management services specifically designed for faith based and other not-for-profit organizations (non-profit banking)
Savings, checking, CD and IRA accounts (consumer banking or retail banking services
One stop financial services center: Faxing, check cashing, bill payments, money orders
Loans that contribute to a healthier environment by reducing energy consumption, rebuilding on vacant or contaminated sites, reusing existing structures or that support “green” businesses (conservation loans,, environmental banking).
*** P.S Shorebank is the country’s first community development bank. It began in 1973, when its founders acquired a bank in a declining neighborhood on Chicago’s South Side to demonstrate that banks can be powerful tools for positive community change ***
Second, let me state the following:
Communities can not achieve economic prosperity if entrepreneurial activities and residents’ health are compromised by toxins in the land, air and water, or if natural resources are consumed in an unsustainable way. Therefore, to build strong sustainable communities, we must also focus on environmental issues.
Now it is up to us to decide whether we can bring our collective buying power to institutionalize a corporation that will do both providing us with various choices of financial services while providing a return to our investments and practice safe, sound and conservative lending policies that will meet the credit needs and financial growth and development of our communities while promoting environmentally friendly practices.
How do we address environmental issues?
By adopting sound conservation principles for our own operations – reducing energy and paper consumption, reducing and recycling our waste and buying products made of recycled materials.
By providing information to customers that show how their choices have long term environmental impact. Homeowners, if they know how, can reduce their electric and gas usage, benefiting their pocketbooks as well as the environment. Businesses, if they know how, can also reduce their energy consumption, waste and potentially their use of toxic chemicals.
By providing financing for physical improvement that benefit the environment. These physical improvements can include building modifications, equipment upgrades and restoring vacant building to community by revitalizing its real estate, leading to improve perceptions and higher property values.
How do we support community development investment?
By providing residential real estate loans that strengthen communities, providing affordable housing and build borrowers’ wealth.
Loans to small businesses and faith based and nonprofit organization that create jobs and expand community services.
Conservation loans for projects that reduce energy consumption, remediate contamination, or support green business practices.
Bank deposit and retail services.
How do we come up with the capital requirements needed to institute such an operation?
Once we get to the private offering of shares of the Corporation, my hope is that a good number of us Caribbean will come together to collectively combine our buying power to raise approximately $10,000,000. In order to have certain tax benefits and other governmental support, the Corporation must be minority owned and I want to first give the opportunity for people in the community, black owned small businesses, faith based organization, other minority owned businesses, and friends and families to buy the shares. Alternatively, there are several other organizations that support this type of initiative: a) Center for Financial Services Innovation is a nonprofit corporation that provides investment capital to such start-up. b) National Community Investment Fund (NCIF) is an independent charitable trust that invests in banks that generate both financial and social returns. c) Northern Initiative, a non profit organization that also invest in such venture. d) Many large banks or financial institutions see this type of venture as a way to support their community reinvestment act examination.
See my blog on how to finance a community development bank for more details
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