WASHINGTON — The New America Foundation is proposing the government set up a fund that can provide long-term equity to banks and credit unions that meet certain standards when serving their communities.
Ellen Siedman, financial services policy director for the foundation, did not specify all of the qualifications a bank or credit union would need to participate some of those she listed included high loan to deposit ratios, branches in the community, evidence of lending into the community they serve and, subject to reform, an outstanding CRA rating.
The equity provided would resemble that provided by the Community Development Financial Institution Fund of the U.S. Treasury department, but they would specifically not be limited to only credit unions and banks which are recognized CDFIs.
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She did not specify what regulatory or legislative changes would have to take place to allow credit unions to participate in the fund due to the existing capital restrictions, but she suggested the equity the fund provided would be co-called "patient" equity which would fund long term bank and credit union lending.
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