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Treasury official said the commitment by the Economic
Opportunity Coalition will be announced by Vice President Kamala
Harris at the Treasury's annual Freedmen's Bank Forum focused on
the Biden administration's efforts to boost economic opportunity
in communities of color.
The commitment from the 24 mainly financial firms and three
foundations aims to build upon more than $8.7 billion in
Treasury capital investments in minority banking firms and
community development financial institutions at last year's
forum.
Those allocations were part of $12 billion in funding for such
lenders from a COVID-19 aid bill passed at the end of 2020 and
signed into law by former President Donald Trump.
U.S. Treasury Secretary Janet Yellen last year issued a call to
the private sector to add to the public investments to bring
more capital into underserved communities. The firms including
Bank of America,, Mastercard, PayPal, Micron Technology and the
Ford Foundation announced their group's formation in July at an
event with Harris.
"The private sector is making valuable contributions, in
addition to Treasury's work, to meaningfully address persistent
disinvestment in marginalized communities," Yellen said in an
emailed statement to Reuters. "The commitments announced today
will be a force multiplier for the capital the Biden
Administration has deployed."
Additional deposits bring down a lender's loan-to-deposit ratio,
which allows them to increase lending while still maintaining
adequate liquidity.
According to data from the Federal Reserve Bank of St. Louis,
community banks typically aim to lend 80 to 90 cents of every
dollar they hold in deposits, but weak loan demand and high
deposit rates during the pandemic held the 2021 ratio to the
mid-70% range.
(Reporting by David Lawder; Editing by Sam Holmes)
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