A framework to match minority depository institutions (MDIs) and community development financial institutions (CDFIs) with investors is being explored by the the Federal Deposit Insurance Corp. (FDIC) in an effort to facilitate greater support for such institutions and the communities they serve, the agency’s chairman said Wednesday.
Giving a keynote speech before the University of Chicago Law School and American Financial Exchange Webinar on “The Role of Minority Depository Institutions and Innovation in the Age of COVID-19,” FDIC Chairman Jelena McWilliams traced the challenges facing MDIs in particular and delineated the steps taken thus far to help expand her agency’s engagement and collaboration in support of them. But she said the agency could do more.
McWilliams said the FDIC is exploring a framework that would match MDIs and CDFIs with investors interested in the particular challenges and opportunities facing those institutions and their communities. “Although we are still developing the details, the idea would include a vehicle through which investors’ funds would be channeled to make investments in or with MDIs and CDFIs, including direct equity, structured transactions, funding commitments to loan participations, or potential loss-share arrangements,” she said.
McWilliams said the initiative (which sounds a bit like “Shark Tank,” but McWilliams avoided naming the particular television show that “may or may not” have provided the inspiration) seeks to accomplish several objectives, including maximizing the benefits to MDIs and the communities they serve by providing capital preservation and growth, as well as providing a minimal return to investors. “We expect to release more information in the near future, and we will continue to work with stakeholders on how best to proceed,” she said.
“Creating a Financial System of Inclusion and Belonging” keynote speech by FDIC Chairman Jelena McWilliams before the University of Chicago Law School and American Financial Exchange Webinar on “The Role of Minority Depository Institutions and Innovation in the Age of COVID-19”