Sending Office: Honorable Bobby L. Rush
Supported by: The Financial Services Innovation Coalition
Cosponsors (12): Clarke, Cohen, Fudge, Grijalva, Hastings, Jackson Lee, Henry C. “Hank” Johnson Jr., Barbara Lee, Ocasio-Cortez, Omar, Bennie Thompson, Tlaib
Black banks have long
served low- and moderate-income neighborhoods by providing mortgages, opportunities to build credit, and welcoming places to deposit earnings, but they are now in danger of disappearing. The
New Market Tax Credit (NMTC), a venture capital program intended to attract investment to these lower income neighborhoods which need it the most, has instead put money in the pockets of a few wealthy developers.
Additionally, the Great Recession hit black banks hard. Creative Investment Research, a firm that monitors minority-owned financial institutions, found that nearly a quarter have gone out of business, and predicts there will only be seven left in the entire
country by 2028 if the status quo does not change.
That is why I am proud to introduce
H.R. 41, the Reenergized Economic Sustainability for Community and Urban Entities Act for Black and Community Banks (RESCUE Act). This bill codifies the Minority Bank Deposit Program (MBDP), provides regulatory relief for minority banks,
women’s banks, and low-income credit unions, and mandates the GAO to investigate the NMTC program.
The MBDP was established in 1969 to promote minority-owned enterprises by directing government funds to minority banks, women’s banks, and low-income credit unions for appropriated money, cash advances, certificates of deposit
and other government funds. This program has helped participants learn from financial experts, strengthen their understanding of Treasury services, expand operational capacity, and accelerate growth in struggling communities.
The RESCUE Act strengthens MBDP and participating banks by:
Mandating federal departments and agencies use minority banks, women’s banks, and low-income credit unions to the maximum extent possible as permitted by law, and a minimum of 10 percent;
Maintaining a roster of such banks to facilitate this process and distributed it to all federal departments and agencies; and
Mandating federal financial supervisory agencies consider engagement with minority banks, women’s banks, and low-income credit unions when assessing the record of financial institutions.
Furthermore, the RESCUE Act provides regulatory relief by:
- Assigning a lower level of risk to loans using manual underwriting, which will allow more money to flow to private enterprise; and
- Providing flexibility to encourage affordable small-dollar lending, which will provide alternatives to predatory payday lenders, and pawn shops.
- Finally, the RESCUE Act mandates the GAO carries out a case study on the NMTC by:
- Surveying communities and institutions that wish to receive the tax credit about why they are not receiving the tax credit; and
- Determining where the tax credit money actually went and on what it was used.
The country’s dark history of segregation and Jim Crow has concentrated poverty and impeded access to banking services and financial independence among communities of color. While programs such as the NMTC have missed the mark,
black banks have bravely taken on higher-risk investments and customers. They have buoyed their neighborhoods by boosting economic growth, promoting civic participation, and even reducing crime rates. With the RESCUE Act, we now have the chance to help these
critical and historical institutions regain their footing in the ever-lasting wake of the 2008 financial crisis and recalibrate a program to better achieve its original aim.
Therefore, I invite you to join me in supporting this important legislation and expanding access to financial services across the nation. To learn more or to cosponsor, please contact Lauren Citron in my office at
Lauren.Citron@mail.house.gov or at 5-4372.
Bobby L. Rush
Member of Congress
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