WASHINGTON -- in an effort to encourage banks to lend more to minorities and minority-owned businesses, the District of Columbia will deposit $16 million in small local banks, the city's mayor has announced.
"It is our hope that this program will encourage the participating financial institutions to make money available to more district residents and small businesses," said Mayor Sharon Pratt Kelly, who unveiled the program at a May 14 luncheon for the National Association of Women Business Owners.
Four Banks Chosen
The government this month has placed $7.5 million in certificates of deposit with four banks based in the city: Industrial Bank of Washington, $2 million; Independence Bank, $500,000; Adams National Bank, $3 million; and Franklin National Bank, $2 million.
The institutions were selected based on their Community Reinvestment Act ratings, credit ratings, and rates of return on various financial instruments.
"These banks have a good track record in terms of making credit available to women and minorities," Mayor Kelly said in an interview after her address.
"It was really more an expression of support and to say that we will reward those that make credit available."
To qualify for the program, banks must be either based in Washington or maintain half of their branches here. They must also have assets of less than $350 million.
Finally, they must disclose financials and community reinvestment activities to the city's treasury office.
Washington expects to place the remaining $8.5 million by mid-July.
"We will use that money to shove out into the community," said Barbara Blum, chairwoman and president of Adams National Bank.
The city, she said, "had a lot of its money in money-center banks and in mortgage banking firms, and it wasn't being invested in the community."