(Nov. 5, 2021) Climate change poses “significant challenges” to the safety and soundness of financial institutions and the stability of the financial sector more broadly, the Federal Reserve said in a statement this week. The assertion was issued in the wake of a declaration issued earlier in the week by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), as part of the international conference (the “Conference of Parties 26” or COP26) held in Glasgow, Scotland, about climate change. “A sustained global response by national authorities, the international community, and the private sector can address the financial and economic implications of climate change,” the Fed statement said … A new Office of Minority and Community Development Banking to support the FDIC’s work with minority depository institutions (MDIs), community development financial institutions (CDFIs), and other “mission-driven” banks was announced this week by the agency. The FDIC said the new office “will further promote private sector investments in low- and moderate-income (LMI) communities.”
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(Sept. 17, 2021) A new fund designed to help banks serve low-income and minority communities will count Microsoft and Truist Financial Corp. – the sixth largest U.S. bank – as its anchor investors, the FDIC announced this week.
The FDIC established the Mission-Driven Bank Fund (MDBF), it said, to channel private capital and other resources to minority depository institutions (MDIs) and community development financial institutions (CDFIs). “MDIs and CDFIs are banks, savings banks, and savings associations that provide critically needed capital and financial services to minority, lower income, and rural communities,” the FDIC said.
Investments in the fund, the FDIC has said, would assist MDIs and CDFIs to (among other things) raise capital necessary to serve communities; weather economic downturns; attract technical expertise; and acquire and use technology.
Also joining as a “founding investor” in the fund is Discovery, Inc., a U.S. multinational mass media factual television company, according to its own description. The three groups’ investment would total $120 million; more investments are expected, the FDIC said.
The “anchor investors” and founding investors were selected, the agency has said, through a competition to counsel the fund’s investing. Under the rules of the competition, the investors were required to have experience managing investment funds and with prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve.”
The MDBF has been in development by FDIC since last November, when the agency announced it was looking for investors in the fund. The agency said then that it would play no role in fund management or individual investment decisions of the fund. However, it noted it would continue to “assess the alignment of the Fund’s on-going operations with its purpose of assisting Mission-Driven Banks.”
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