Authors: Adams, Margaret, and Rosser, Lawrence B
Summary
This paper is one of a series which analyzes private sector-initiated reinvestment strategies. It describes how a few bank holding companies have used provisions contained in the 1970 amendments to the Federal Barik Holding Company Act to create or acquire non-bank community development subsidiaries in order to purchase, rehabilitate and resell and/or operate single and multi-family housing for low- and moderate-income persons. The authors point out that to date, only fourteen bank holding companies have even applied to do community development activities through a subsidiary, and that, of that number, only four are currently engaged in residential redevelopment. Since the authority to grant permission to engage in such activities is vested in the Federal Reserve System, the authors note that while state governments can do nothing directly to modify the statutory authority to encourage the use of this strategy, there are things that states can do which could indirectly provide incentives for more bank holding companies to participate in the strategy.
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Community Development Subsidiaries of Bank Holding Companies as Vehicles of Reinvestment
