Minority Depository Institutions

Minority depository institutions play a unique and critical role serving as catalysts for economic growth and revitalization to low-to-moderate income and minority communities. These banks provide credit, capital and financial services to neighborhoods that are economically distressed and/or have historically been underserved by the financial industry.

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Position & Background

ICBA supports a regulatory framework that factors in the unique business model, markets and portfolio of minority depository institutions (MDIs or minority banks).
ICBA encourages bank regulators to include in examination manuals a section dedicated to the distinct characteristics and objectives of MDIs and other mission-oriented banks. Manuels should clarify that MDIs are able to lend safely to minorities and low-income communities.
ICBA supports requiring at least one senior field examiner that is experienced with MDI portfolios.
ICBA advocates for use the same definition for MDIs across government agencies, as set forth in Section 308 of the Financial Institution Reform Recovery Enforcement Act (FIRREA).
ICBA appreciates the federal banking agencies’ efforts to encourage collaborative relationships and partnerships between minority banks and community banks at large for financial support, deposits, lending, and technical assistance.
ICBA supports legislation that would create and strengthen federal programs that provide capital, investments, deposits, technical assistance, and mentorship to minority banks, promote de novo minority banks, streamline the Community Development Financial Institution (CDFI) certification process for MDIs, and otherwise help MDIs better serve their customers and communities.
ICBA advocates for the exemption of minority depository institutions from documenting compliance with Community Reinvestment Act (CRA) regulations or a streamlined approach with a presumed rating of “high satisfactory.”
ICBA encourages the CDFI to clarify their Minority Lending Institution (MLI) designation so that it is not confused with the MDIs designation. ICBA supports and encourages opportunities for minority banks to partner with private sector entities for investment, technical assistance, and product/service discounts. ICBA also supports additional resources and education programs that focus on areas unique to minority banks.
ICBA strongly supports the existence of the FDIC’s MDI Subcommittee of the Advisory Committee on Community Banking and the OCC’s Minority Depository Institutions Advisory Committee.
ICBA supports tax incentives to encourage deposits and investments in MDIs. (See Tax Policy resolution.)

Minority banks know and understand the culture of the communities they serve and are able to provide customized and culturally sensitive products and services. They finance small businesses, make housing affordable, revitalize community facilities, and provide financial mastery and technical assistance to their customers.

Minority banks are committed to the social mission of helping to improve lives and stabilize neighborhoods despite the difficulties and challenges of operating in distressed communities. It is crucial that minority banks have the legislative, regulatory, and financial support they need to stay operational and profitable.

ICBA will promote Section 308 of the Financial Institution Reform Recovery Enforcement Act (FIRREA) which establishes goals for the federal banking agencies to promote, create, and preserve the number and character of MDIs. ICBA will work to reduce excessive compliance burdens that keep MDIs from pursing their mission and look for opportunities to provide access to capital and other resources so that they may continue to serve their communities, grow, and thrive as well as foster the creation of new MDIs.