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Ncrc opposes the deposit insurance application of Payservices, Inc. for failing to include a CRA plan

April 8th, 2021

John Henrie
Regional Director
Federal Deposit Insurance Corporation
10 10th Street, NE
Suite 800
Atlanta, GA 30309-3849

RE: Application for Deposit Insurance (New Bank) from PayServices, Inc.

Dear Mr. Henrie:

Please kindly accept our comment on the application from PayServices, Inc. (Delray Beach, Florida) for deposit insurance.

PayServices failed to include a CRA plan in its application. As a result, the public has no means of assessing how the applicant intends to meet the community’s needs and conveniences.

Without a CRA plan, the application is incomplete, and as a result, the FDIC should not consider this application.

Congress required supervisory agencies “to assess an institution’s record of helping to meet the credit needs of the local communities in which the institution is chartered, consistent with the safe and sound operation of the institution, and to take this record into account in the agency’s evaluation of an application for a deposit facility by the institution.”[1] In 345.29, Congress specified that it required this evaluation to occur as a condition for evaluating an application for deposit insurance for a newly chartered financial institution.[2]

The lack of a plan would make it impossible for the FDIC to evaluate PayService’s CRA performance in the future. Consistent with the requirement for approval of a plan as a condition for charter approval, Congress also required all banks to meet the credit needs and conveniences of the entire community where a chartered bank receives deposits on an ongoing basis. The CRA regulations “establish the framework and criteria by which the Agencies assess an institution’s record of helping to meet its community’s credit needs, including low-and-moderate-income neighborhoods, consistent with safe and sound operations.”[3]

In its instructions to applicants for charter and deposit insurance applications, the FDIC clearly states that all applications should include a Community Reinvestment plan. Even though we doubt that the FDIC would approve an application that lacks a CRA plan, we feel it is important for NCRC to file a public objection. We expect that the FDIC will reiterate its longstanding commitment to holding its depositories accountable to meeting their CRA obligations by not approving PayService’s application.

In conclusion, PayServices has not fulfilled the relevant regulatory requirements for deposit insurance applications by not providing any of these materials. The FDIC should not begin to evaluate the application unless the company offers a plan. Only once the applicant can return with a plan should the FDIC begin to consider the merits of the company’s proposal.

Please reach out to Adam Rust, Senior Policy Advisor (arust@ncrc.org), or me with any questions or requests for clarifications.

Sincerely,
Jesse Van Tol
CEO
National Community Reinvestment Coalition


[1] 12 CFR Subpart A- 345.11 (b) (Authority, purposes, and scope)

[2] FDIC Law, Regulations, Related Acts. Section 2000. Part 345 – Community Reinvestment. Retrieved at https://www.fdic.gov/regulations/laws/rules/2000-6500.html

[3] FDIC Division of Depositor and Consumer Protections. What is a Compliance Management System: Community Reinvestment Act (CRA). Retrieved at https://www.fdic.gov/regulations/resources/director/presentations/cra.pdf

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

Complete the form to download the full report: