FDIC Releases Resource Guide to CDFIs
On May 8th, 2014, the FDIC released a Resource Guide to help banks meet their community credit and development goals, as required under the Community Reinvestment Act. The Resource Guide focuses on opportunities to work with community development financial institutions (CDFIs).
CDFIs are special financial institutions whose mission includes providing credit products and services to low and moderate income neighborhoods, which include both flexible lending programs and borrower outreach and counseling. The Resource Guide is aimed at giving banks the information necessary to identify and evaluate collaboration opportunities with CDFIs. Under the CRA, banks may work with CDFIs in many ways, including by offering credit through or in cooperation with a CDFI partner, subject to certain guidelines.
The new guide, called Strategies for Community Banks to Develop Partnerships with Community Development Financial Institutions, applies to all FDIC-supervised institutions. It explains CDFIs and how banks can work with them to meet their CRA obligations. It provides information about the CDFI industry, their key characteristics (such as legal structure, regulatory oversight and investment focus), the types of investments and partnerships banks can utilize when working with them in order to meet the CRA lending, investment, and service test criteria. The guide also provides certain case examples of bank/CDFI partnerships, which illustrate some common types of partnership arrangements.