The Interagency CRA FAQs list community development corporations (CDCs) as one of several types of financial intermediaries to which banks can make “qualified investments” for CRA credit (with other examples including Community Development Financial Institutions (CDFIs) and New Markets Tax Credit-eligible Community Development Entities). An FDIC advisory opinion confirms that investments in community development corporations are permissible activities for state banks. FDIC 94-51 (October 21, 1994), citing 12 CFR 24.2(c). Other similar types of entities are small business investment companies (SBIC) under the Small Business Investment Act or community economic development entities (CEDE). [The FDIC has informed the IBA that it has removed all of its advisory opinions from its website due to a high risk of staleness. We have provided links to archived versions of the advisory opinions for your convenience. If you have a question about an advisory opinion, the FDIC recommends that you contact your FDIC Field Office, which you can find by clicking here.]
There are advantages for CDCs under Illinois law as well. The “Small Business Development Act” (within the Build Illinois Act) sets out the statutory guidelines for setting up a CDC, which can act as a financial intermediary to make participation loans to small businesses with the Illinois Department of Commerce and Economic Opportunity (DCEO).
While the OCC is not your federal regulator, it offers the most comprehensive resources that will likely help your research:
- OCC Webpage and FAQs, Formation of a National Bank Subsidiary Community Development Corporation
- OCC Community Developments, “Bank-Owned Community Development Corporations” Fact Sheet
- OCC Community Developments, “An OCC Guide to Forming a CDC” (Winter 2004)
- OCC Community Developments, “Can a Community Bank CDC Produce Big Results?” (Winter 2004)
- OCC Community Developments, “Community Development Corporations; Corrective Capitalism at Work” (Winter 2004)
- OCC Community Developments, “How an Innovative Bank Launched a CDC” (Winter 2004)
- OCC Community Developments, “How a Large Bank CDC Targets Needy Neighborhoods” (Winter 2004)
- OCC Community Developments, “Investing in Community Development Corporations — CRA Considerations” (Winter 2004).
- OCC Community Developments, “Options for Structuring a Bank CDC” (Winter 2004)
- OCC Community Developments, “Promoting the Public Welfare: What Bank CDCS Can Do” (Winter 2004)
- OCC Community Developments, “Putting a CDC Mission Statement into Practice” (Winter 2004)
- OCC Community Developments, “Compliance Corner: Expanding Your CRA Reach with CD Banks and CDFIs (Summer 2002)
- OCC Community Developments, “Investment in the Future: Bank of America’s Community Development Corporation and the Power of Investments (Winter 2001)