Earthquakes shake more than walls, and hurricanes destroy more than roofs.
Natural disasters exact a huge-and growing-economic toll on the communities of this country. Our nation's lending institutions feel the impact as strongly as anyone. Businesses that fold take away resources. Homeowners who are wiped out default on mortgages. Communities lose viability, and banks suffer.
Though disasters are often viewed through an emotional lens, with visions of devastated families and broken buildings, lending institutions feel the very real financial impact. Until now, though, there were only limited ways banks could help after a disaster, and almost no organized programs for helping before a disaster, to avert or mitigate the devastation.
The Federal Emergency Management Agency has launched an initiative that focuses on partnerships as a way to make communities more disaster- resistant. Called "Project Impact: Building Disaster Resistant Communities," the initiative gives lending institutions an opportunity to make a major contribution to their communities while safeguarding their business and future economic viability.
Seven communities had been designated as Project Impact pilot programs, but within the fiscal year, one city per state will be part of Project Impact, and all cities can participate on their own, using a FEMA guidebook available through the agency's Web site.
Why should lending institutions become involved in Project Impact? Here are some reasons:
It offers high-profile community involvement. As a Project Impact partner, your lending institution would be highly visible as a community supporter. Your bank employees can work with local officials, residents, church leaders, educators, business owners, and others in special projects, hazard assessments, and setting priorities for mitigation against natural disasters that are likely to occur in your area. Further, media attention in our existing Project Impact communities has been outstanding, with current partnerships getting much of the focus.
It helps safeguard the health of the community. By working with businesses to ensure they have taken action to protect themselves and have plans to stay in operation after a disaster, banks can maintain a steady source of customers and revenue. Businesses don't move away, and Project Impact can be an attraction for communities seeking new business investment opportunities.
It offers opportunities to sell an innovative loan product and protect existing bank portfolio. By making loans for businesses and homeowners interested in making their properties more disaster-resistant, your institution increases revenue. And by helping to safeguard properties mortgaged through your institutions, you're reducing your risk of unnecessary losses.
It helps protect business operations. By working with other businesses and other partners, you obtain valuable ideas on protecting your business facilities and information systems. By making sure your employees are also prepared, you reduce the losses you might suffer if you were unable to staff your institutions in the critical days and weeks following a disaster.
What kinds of activities are possible?
Making below-market-rate loans available for retrofitting homes or for structural mitigation activities. Seafirst Bank in Seattle, for example, is making such loans available to homeowners wishing to make their homes earthquake-resistant. The loan amounts are expected to be between $2,000 and $5,000.
Reducing loan fees. Washington Mutual Bank, also in Seattle, is offering loan packages for retrofitting, while waiving fees for the credit report, title insurance, inspection, recording and the like.
Incorporating disaster readiness/prevention in business plan evaluation. As part of your commercial lending plan, banks can include a review of disaster prevention and preparedness activities when studying business plans of potential new clients.
No community in this country is immune to natural disaster. It's time for the lending industry to work with emergency management, state and community officials, and residents to stop the funding drain.
With your help, your communities can become disaster-resistant, and in the process, your institutions can prosper.
For more information, call FEMA's Office of Corporate Affairs at 202- 646-3923 or visit the FEMA Web site at www.fema.gov.
