2021 CSBS Community Bank Case Study Competition Journal

2021 COMMUNITY BANK CASE STUDY COMPETITION

Liberty Bank Uses Their Mission to Promote Diversity, Inclusion, and Social Justice in Fair Lending Practices Diversity, inclusion, and financial equality are woven into the fabric of Liberty’s existence. Although the Equal Credit Opportunity Act (ECOA) exists to avert discrimination in the lending practices of all banks, Liberty plays a special role in “targeting minorities in its lending activities” (Cloy). Liberty’s practices directly coincide with the significance of the ECOA. Also assisting in the emphasis of Liberty’s far-reaching mission are the Community Development Financial Institutions (CDFI) Program, and the Minority Depository Institution (MDI) Program. As part of the economic relief administered in 2021, programs such as the Emergency Capital Investment Program and the U.S. Treasury’s CDFI Rapid Response Program (RRP) placed an even greater emphasis on goals all too familiar with that of Liberty’s: administering financial help for low to moderate income communities during their greatest time of need, the pandemic (Cloy).

Coupled with their fair lending practices, Liberty can be seen as a beacon of light and hope for underserved communities and can serve as example for other community banks to follow suit in leveling the playing field. Liberty Bank’s Lack of Trust Department Shows Wealth Gap Across Demographics As a community bank serving the underserved minority demographic, Liberty is faced with the challenge of wealth deficiency among their customer base. Although part of their name, Liberty lacks a trust department because the wealth of African-Americans’ is limited, relative to the majority population. Since Liberty’s primary customer base does not have as much wealth to be managed as their majority counterparts, they are unable to earn additional fee income through wealth management services like larger institutions. Continuing the Mission Set by Their Forefathers with the Help of Policy Makers Since 1972, Liberty has found a strategy to be prosperous in a market that most would imagine to be unprofitable and too risky. In more recent times, policy makers have acknowledged that MDIs need assistance, mentoring, and a focus on issues that are unique to these types of institutions. The FDIC states that they are “committed to promoting and sustaining the vibrant role these banks (MDIs) play in their communities” (Rudolph 9). To address these needs, the FDIC “appointed additional minority bankers to the FDIC Board’s Advisory Committee on

“Do not let our hearts be any longer discouraged … but let us promote ourselves and improve our own talents.”

- Maria W. Stewart, 1832 (qtd. in Todd, George, I)

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