Inside Philanthropy, November 4, 2018: What a big bank is doing to boost economic opportunity in a single city
Wells Fargo’s direction here is interesting. Unlike several of its competitors, Citi among them, the bank has chosen to focus on a single city: Washington, D.C. Last month, it promised over $1.6 billion in loans and grants over the next five years, with a focus on community investment in the nation’s capital. That follows a pledge to target $400 million in philanthropic donations in 2018 and to raise its minimum pay rate to $15 an hour.
The bank’s D.C. master plan, which it calls “Where We Live,” involves two components. The largest by far isn’t strictly philanthropic. Wells Fargo intends to invest over $1.5 billion into small business, community development, affordable housing and the like. The investment initiative prioritizes Wards 7 and 8, which contain a high proportion of lower-income black households.
Wells Fargo’s eagerness to recover from its self-imposed setbacks could underscore the direction and geography of its giving. Making a charitable splash in D.C. may increase the bank’s positive visibility in the Beltway, softening its image to lawmakers and regulators—at least indirectly. And while plenty of Wells Fargo’s competitors are rolling out community development support, its focus on that arena brings to mind another recent signifier of its failings: the Community Reinvestment Act, or CRA.
As it prepared to debut the “Where We Live” program in D.C., Wells Fargo worked closely with the National Community Reinvestment Coalition (NCRC), which advocates for increased investment in underserved neighborhoods. NCRC has been a strong supporter of the CRA, which the organization’s CEO Jesse Van Tol refers to as “a landmark civil rights law.”
As Van Tol discusses in an August New York Times op-ed, the Trump administration has floated changes to CRA that could weaken it. Many bankers are on board, citing cumbersome and outdated regulatory requirements tethered to the notion that banking occurs at physical branches—and not online or via apps. “We’re eager to work with the regulatory agencies, Congress, banks and the entire financial sector to modernize [CRA],” Van Tol writes. But simply stripping away geographic lending requirements could signal a return to redlining, he argues.