Today, the National Community Reinvestment Coalition (NCRC) and Morgan Stanley (NYSE: MS) announced a $15 billion, four-year community benefits plan that will increase the financial services company’s lending and investments in lower-income communities.
Under the plan, developed as part of the financial services company’s application to acquire E*TRADE Financial Corporation (NASDAQ:ETFC), Morgan Stanley’s lending and investments in low- and moderate-income (LMI) communities and communities of color will increase by 43% annually over previous levels from Morgan Stanley and E*TRADE.
The plan also includes:
- $50 million in grants to organizations that provide critical capital and services during the COVID-19 pandemic, including CDFI’s, loan funds, counseling and technical assistance agencies and community development organizations.
- $5 million in grant capital from Morgan Stanley for NCRC to pass through to its CDFI, affordable housing, small business and housing counseling members. NCRC will focus on organizations not currently supported by Morgan Stanley, with a focus on advancing racial equity.
- For up to $1 billion in bond offerings to CDFIs that Morgan Stanley advises and manages, CDFIs will pay no fees to Morgan Stanley.
- Community development lending and investments focused on new capital rather than retraded assets or prior period investments.
- Expansion of Morgan Stanley’s Human Capital/Capacity Building program to new cities and regions, including Washington, D.C.
- Strengthening of Morgan Stanley’s commitment to internal diversity within the company. Morgan Stanley will discuss and report its efforts with NCRC annually, and work with NCRC to provide two webinars annually for potential suppliers identified by NCRC.
- Supporting the establishment of federal uniform reporting standards in the area of supplier diversity.
- Semi-annual meetings between Morgan Stanley, NCRC and up to 20 of NCRC’s member organizations.
The plan was developed with input from NCRC and its members, and it will focus on underserved populations, including people of color and people with low- and moderate-incomes.
“This is a big commitment for Morgan Stanley to increase the value of the firm’s lending and investments in lower-income communities and communities of color that have long been neglected by the nation’s banks,” said Jesse Van Tol, CEO of NCRC. “Morgan Stanley is going beyond the minimum requirements of laws like the Community Reinvestment Act, and that’s an important model for anyone in the private sector who says they want to solve the nation’s racial wealth divide. Solutions take more than minimum efforts and we’re pleased to see Morgan Stanley has put their commitment in writing.”
Since 2016, NCRC has negotiated community benefits plans with 12 different banks for lending, investments and philanthropy in underserved communities worth a combined $194 billion.
Since 2010, Morgan Stanley has received six consecutive “Outstanding” ratings from the Office of the Comptroller of the Currency (OCC) for the Firm’s community reinvestment activities.
“Morgan Stanley is committing to do more for poor communities and communities of color that have long been overlooked by lenders, and we’re pleased to see they’re putting that commitment in writing with NCRC, along with a pledge to report on their progress,” said John Taylor, President and Founder of NCRC. “This plan expands on Morgan Stanley’s six consecutive ‘Outstanding’ ratings from the OCC for the Firm’s community reinvestment activities. All financial institutions need to do more to address racial equity in who they serve, in their supply chains, in who they hire, and in their leadership and boardrooms.”
“We are pleased that NCRC appreciated the unique investment banking approach Morgan Stanley takes to serving communities, and embraced our innovative style of providing capital well-suited to the needs of our community partners,” said Mike Mantle, Managing Director of Community Development Finance. “We are very grateful that NCRC’s members took time to educate and update us on the critical needs of their communities.”
The National Community Reinvestment Coalition and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business. NCRC was formed in 1990 by national, regional and local organizations to increase the flow of private capital into traditionally underserved communities. NCRC has grown into an association of more than 600 community-based organizations in 42 states that promote access to basic banking services, affordable housing, entrepreneurship, job creation and vibrant communities for America’s working families. Learn more at: www.ncrc.org
Morgan Stanley is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.
Gaston Terrones Dimant
Summary of the Community Benefits Plan between the National Community Reinvestment Coalition and Morgan Stanley
Morgan Stanley commits to doing $15 billion in community development loans and investments from 2020 through 2024, as well as additional philanthropic commitments described below. This plan is being made in connection with Morgan Stanley’s application to acquire E*TRADE Financial Corporation.
Community Development Lending and Investment (CDLI)
Community Benefits Commitment: $15 billion over 4 years
Morgan Stanley will increase their amount of community development loans and investments by 43% a year over what Morgan Stanley and E*TRADE were previously doing. Focus will be on new capital rather than re-traded assets or prior period investments and will be managed by mission driven entities selected by Morgan Stanley. Morgan Stanley also commits that all multifamily activity submitted for CRA credit will continue to be done only with mission-driven entities.
Community Benefits Commitment: $50 million over 5 years
Morgan Stanley and E*TRADE will commit $50 million to organizations that provide critical capital and services during the pandemic, including but not limited to CDFIs, loan funds, counseling and technical assistance agencies and community development organizations. Morgan Stanley also commits to support Washington, DC area based organizations at the same level as E*TRADE at $4.2 million a year. Morgan Stanley agrees to provide $5 million in grant capital for NCRC to pass through to its CDFI, affordable housing, small business and housing counseling members. NCRC will focus on organizations not currently supported by Morgan Stanley, with a focus on advancing racial equity.
Human Capital/Capacity Building
Morgan Stanley will expand its signature Human Capital/Capacity Building program to new cities and regions, including Washington, DC and at least one other city/region.
Racial Equity, Diversity & Inclusion
Morgan Stanley will work to strengthen diversity at the board, top management and middle/lower management levels and will discuss and report on its efforts with NCRC annually. Morgan Stanley will also work with NCRC to provide two webinars per year with potential suppliers identified by NCRC, and provide additional coaching or feedback requested by any of these suppliers. Morgan Stanley will also support the establishment of federal uniform reporting standards in the area of supplier diversity.
Morgan Stanley agrees to meet with NCRC and up to 20 of their members twice a year.