The FDIC launched a new Mission-Driven Bank Fund that will support insured Minority Depository Institutions (“MDIs”) and Community Development Financial Institutions (“CDFIs”) by directing private capital investment into them to, in turn, allow them to further benefit the minority, lower income and rural communities they serve.
The FDIC stated that the aim of the fund is to enable MDIs and CDFIs to “build size, scale, and capacity” so that they can offer affordable financial products, encourage economic and community development, and build prosperity. The FDIC will retain an advisory role to support the fund’s mission focus, but will not contribute capital to, manage, or be involved in investment decisions of, the fund.
Commentary
The FDIC’s efforts to facilitate the creation of the Mission-Driven Bank Fund is the latest effort by the bank regulators to increase outreach to underserved communities. In 2020, the OCC partnered with a number of national banks in its Project REACh (REACh stands for Roundtable for Economic Access and Change). As Chair Jelena McWilliams noted in interviews about the fund’s launch, she envisions this fund as similar to SharkTank for MDIs and CDFIs, where investors can provide capital and technical assistance. The FDIC hopes to start accepting pitches from the estimated 280 eligible institutions beginning in 2022.
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