May 8, 2009
 
State to deny banks that refuse community investment pledge

Illinois State Treasurer Alexi Giannoulias is demanding that
Illinois financial institutions reinvest in the communities they serve
if they expect future state money.

Beginning June 1, Giannoulias will require all financial
institutions to sign a three-point community reinvestment pledge before
receiving or renewing state deposits.

Currently, Illinois has deposits worth $1.4 billion in 205 banks,
26 credit unions and 20 savings and loans. The new pledge goes further
than what’s required under current state and federal laws.

"This is the anti bailout," Giannoulias said. "We are going to hold
financial institutions" ‘feet to the fire" and ensure that state
deposits go to good corporate citizens."

Giannoulias worked in conjunction with the Monroe Foundation to
develop the pledge that will specifically benefit traditionally
underserved, low- to moderate-income and rural areas. Community
residents can use the pledge form as leverage with financial
institutions that do not provide sufficient services to their
communities.

"We"re pleased Treasurer Giannoulias has shown leadership and the
willingness to work with community reinvestment leaders to hold
financial institutions accountable," said Otis Monroe, president and
CEO at the Monroe Foundation. "This revised policy of commitment will
provide Illinois citizens more transparency and an understanding of
which banks have a real commitment to community reinvestment."

The pledge will ask each financial institution to employ its best efforts to provide:

* Homeownership and foreclosure prevention products. As of March, 1
in 135 housing units in Illinois received a foreclosure filing, and
research shows that minorities (regardless of their income) are more
likely to receive high-cost or predatory mortgage offers. Giannoulias
encourages banks to offer refinancing assistance to homeowners and to
default to offering 30 year, fixed rate mortgages to homebuyers unless
applicants request otherwise.

* Access to conventional banking and savings products for
traditionally unbanked residents. More than 24 percent of minority
families nationwide do not have a checking account and turn to
high-priced currency exchanges or payday loan stores for their banking
needs. Giannoulias encourages financial institutions to offer and
market free checking accounts with no minimum balance to members of
unbanked communities.

* Small business loan and community development products to spur
economic growth and fuel job creation. Small business owners often turn
to credit cards, home equity, commercial lenders or angel investors for
their start-up funding. Giannoulias encourages financial institutions
to work with the Small Business Administration to offer traditional
loan products.

"If financial institutions are going to benefit from state
deposits, they need to show they are benefiting the people of the
state," said Tom Feltner, policy and communications director for the
Woodstock Institute. "This policy makes community reinvestment
expectations clear, and holds banks accountable when they fail to meet
those expectations."

The public can determine if the Treasurer"s Office is doing
business with a particular financial institution by checking the
Finances-Time Deposits menu item at www.treasurer.il.gov. The list is updated monthly.

If residents believe a financial institution on the list is not
fulfilling its community investment pledge, they should contact the
Treasurer"s banking division. The state will work with the residents to
mediate a solution with the bank and consider nonrenewal of future
deposits.

"We want to help the public police their financial institutions,"
Giannoulias said. "If banks are going to benefit from state money, they
need to show that they are working for the people of the state."

 
 
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