Senate Should Expand Public Welfare Investments

BY: JOHN C. DUGAN, COMPTROLLER OF THE CURRENCY

Earlier this year, I had the opportunity to tour Pittsburgh’s East Liberty community and was able to see firsthand the difference that national bank public welfare investments can make in an economically depressed area.

I saw a community that had begun to flourish.  A critical catalyst in the area’s resurgence was the redevelopment of a formerly contaminated “brownfields” site into needed retail and banking facilities.  This and other projects in East Liberty have resulted in the creation of 140 new jobs. The $34 million commercial development paved the way for more than $200 million of projects that are planned or underway in this area.

A good portion of these jobs and the commercial revitalization of East Liberty were made possible by a 1992 law that allowed commercial banks to invest in public welfare projects.  The Depository Institutions Disaster Relief Act permitted investments that have supported critically needed urban revitalization, rural development, and economic growth.  It has provided affordable housing, community services, and jobs in every state.  Many of the investments also bolster low income housing, new markets, and historic rehabilitation tax credit projects.

Last year, Congress took an important step to increase the authority of banks to make public welfare investments by raising the ceiling on such investments to 15% of capital and surplus from 10%.  This amendment will give important benefits to communities everywhere that need investment funds to begin renewals.

Unfortunately, even as the amendment increased the amount of permissible investments, it also narrowed the types of investments that are permissible.

I think that is a real problem. It is hard to believe that Congress really intended to eliminate so many types of worthwhile, safe, and voluntary public welfare investments that would benefit hundreds of communities across the nation – especially when both industry and community groups broadly support such investments.

Fortunately, the House of Representatives has already addressed this issue by passing the Depository Institution Community Development Investments Enhancement Act (H.R. 1066).  This legislation would restore the broader, long-standing authority for national banks and state-chartered banks that are members of the Federal Reserve System, and it would provide the same investment authority to federal savings associations, and is supported by both the Office of Thrift Supervision and the Federal Reserve Board.

 

The Senate Committee on Banking, Housing, and Urban Affairs is now considering the legislation.  Its enactment would fully restore the ability of banks – and expand the ability of thrifts – to work together with community partners to revitalize and stabilize communities and promote the public welfare. I urge the Senate to act as quickly as possible on this important legislation. Communities across the nation, and their residents and businesses, would be the ultimate beneficiaries.

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