title:  These Banks Are Fighting The Cycle Of Poverty In Places The Major Banks Won’t Go
text: A recent special report by James Trimarco for Yes! Magazine has shined a spotlight on the way that certain banking institutions have perpetuated cycles of poverty and institutionalized economic racism. It also shows how a very specific set of banks are working to smash those systems. These banks are called Community Development Financial Institutions (CDFIs).Traditional banks have only one goal to make a profit. They are also incredibly racist, locking people of color out from being able to access capital. Research from MIT in 2008 found that lack of access to capital is the number one driving factor in racial disparities across a range of economic metrics such as profits and employment.CDFIs are not purely profit motivated, so they can serve areas that traditional banks won t, particularly in rural areas and communities of color.  Trimarco looked at how CDFI s are changing lives in the poorest region in the poorest state in the U.S.   the Mississippi Delta region. He writes: Mississippi has more CDFIs per capita than any other state. Its financial ecosystem is a unique place, where bankers and residents are coming to see one another as allies despite a difficult history. It s a window into what the United States might look like if the government actively recruited banks and credit unions as allies in the fight against poverty. CDFIs trace their roots back to the 19th century, with the establishment of black-owned financial institutions. Throughout more than a century, the idea and mission behind these predecessors have expanded dramatically. One of the biggest changes came with the Riegle Community Development and Regulatory Improvement Act of 1994.This created the CDF Fund. It is used to help fund the now more than 1,000 CDIFs there are in the United States. The fund started with $50 million dollars and has grown to more than $230 million dollars. In order to become a CDFI and access that fund, a financial institution must spend at least 50% of their assets in low-income areas.These not-just-for-profit intuitions work on programs such as teaching financial literacy, credit lending and helping people create worker-owned co-ops.CDFIs rarely get much attention in the political spotlight. In the 2016 election, only two candidates addressed the issue seriously. Believe it or not, neither of them was running on the Republican ticket. Hillary Clinton, the now Democratic presidential nominee vowed to double investment into CDFIs. Her then rival, Bernie Sanders, supported a more ambitious (though not unpragmatic) plan to turn post offices into de-facto versions of CDFIs.Whether they remain as they are now, or they continue to evolve and become integrated into the post office, these types of institutions are desperately needed in the United States. They are an idea whose time has come and then been proven to be essential for more than a century.Featured image from Spencer Platt/Getty Images