Mark Winston Griffith

Should Carver and Community Capital Bank Receive a Free (Ghetto) Pass?

Last week Carver Federal Savings, the nation's largest African- and Caribbean-American operated bank, announced it will acquire Community Capital Bank, the country's first bank to be conceived and specifically chartered with a community development mandate. The new Carver will have approximately $800 million in assets and 10 branches in New York.

At first blush, this seems like an exciting moment. It signals that one of the nation's most important Black financial service institutions is expanding and looking to enter new markets. Considering how relatively few people of color in this city enjoy healthy relationships with banks, receive affordable loans and are building assets at a rate comparable to their white peers, surely this must be a good thing. Right?

Let's hope so. Carver offers savings, checking accounts, mortgages and all the traditional services offered by thrifts in several Black neighborhoods across the City. Community Capital Bank caters mostly to small businesses and non-profits, often in low-income areas and neighborhoods of color, offering loans for community development purposes, loans that are otherwise difficult to come by. Most importantly, unlike Carver, Community Capital Bank has a commercial bank charter which allows it to be more aggressive and flexible in its commercial lending. This commercial lending capacity could transform the way Carver does business.

But there are concerns that this merger may not equal more than the sum of its parts. Despite its Black identity, Carver is generally considered a conservative institution that does not represent a particularly dynamic community development presence in areas like Central Brooklyn, Harlem and Southeast Queens where it has branches.

Community Capital has a record of community development in New York that is hard to match, pound for pound. Unlike other institutions in this city, the loans Community Capital Bank makes are, almost by definition, reinvestments in low and moderate income New York. But some feel that Community Capital has struggled to live up to its full potential and, because of its limited size and reach, it has not had the impact that many hoped for when it was first chartered in 19990.

I talked to Lyndon Comstock who was the founding CEO of Community Capital Bank and now lives on the west coast, having left the board of Community Capital seven years ago. I think his words sum it up best: " If Carver is going to use this acquisition as an opportunity to significantly deepen its service to communities of color in New York City, such that the combined entities will be more valuable to these communities than the banks operating on their own, then that would work as a positive outcome. If, on the other hand, the merger is really just putting a nice spin on a standard asset growth, [the adding of] a couple of branches and a loan portfolio bank acquisition, that would be a disappointing outcome to all the hard work that was put into creating Community Capital Bank as a community development bank."

Because of who and what they represent, Carver and Community Capital get a free pass from any likely opposition to their merger. But to whom much is given, much is expected. May this corporate marriage help rekindle at least a tiny portion of all those community reinvestment dreams in low-income areas that have long been deferred.

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Posted at 1:34 PM, Apr 14, 2006 in
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