FDIC partners with Discovery and Microsoft to launch $120 million minority banking fund

The FDIC, in partnership with investors like Discovery Inc., Microsoft, and Truist Financial Corp., has amassed at least $120 million for a fund geared towards bolstering minority banking institutions and community development financiers. These financial entities typically operate in communities with lower and medium incomes, often outperforming mainstream consumer banks in financing projects and lending to local residents.

Since the police killing of George Floyd over a year ago, major corporations and philanthropic groups have substantially increased their support for minority deposit institutions (MDIs) and community development financiers (CDFIs). This additional financial backing has provided a much-needed boost to emerging businesses and projects aimed at tackling economic disparities.

Following George Floyd's demise, numerous multinational corporations and philanthropic organizations have significantly increased their backing for minority deposit institutions (MDIs) and community development financiers (CDFIs). These additional funds have been invaluable to burgeoning businesses and initiatives focused on reducing economic disparities.

Through its engagement with approximately 70 MDIs, CDFIs, trade groups, potential investors, financial advisors, and CEOs of charitable organizations, the FDIC aims to bolster missions-driven banking. This support extends to offering guidance on fund orientation and administration while avoiding direct involvement in investment decision-making.

The mission-driven banking initiative from the FDIC has proved instrumental in promoting and safeguarding financial institutions primarily focused on generating positive socio-economic impact in disadvantaged communities.

Enrichment Data:

1. CDFI Fund: The Community Development Financial Institutions Fund (CDFI Fund) is instrumental in supporting CDFIs and MDIs. The CDFI Fund manages various programs, including the Bank Enterprise Award (BEA) Program, the Capital Magnet Fund, and the New Markets Tax Credit Program. Through these initiatives, the CDFI Fund aims to expand access to financial services in underserved communities.
2. MDIs: Despite facing challenges, MDIs remain crucial in low- and moderate-income communities. Institutions like JPMorgan Chase have devoted resources to bolster MDIs' efforts in building wealth and fostering economic activity.
3. Community Development Initiatives: The CDFI Fund's programs focus on expanding economic opportunities in underserved areas by providing capital and technical assistance. The CDFI Bond Guarantee Program offers long-term, low-cost capital to CDFIs, and the Economic Mobility Corps places national service members in Certified CDFIs to enhance their financial education and counseling capabilities.
4. Innovative Banking Practices: Innovative institutions like OneUnited Bank use AI-driven tools and technology to bridge the racial wealth gap. OneUnited's WiseOne Insights empowers disadvantaged communities to make smarter financial decisions and build generational wealth.
5. Community Reinvestment Act (CRA): The CRA requires banks to cater to their communities' credit needs, including low- and moderate-income neighborhoods. Banks that fail to meet these requirements may face regulatory scrutiny, as exemplified by Oakwood Bank's requirement to develop strategies to equitably lend to low- and moderate-income borrowers in predominantly minority areas.

While there's no specific "Mission Driven Banking Fund" from Discovery Inc., Microsoft, and Truist Financial Corp., these entities' contributions form part of the broader initiatives driving support for minority banking institutions and community development financiers.