Laura Sharman 04 February 2014

Think tank calls community reinvestment act

Banks should be required to lend more to deprived communities that have been underserved by mainstream finance, according to think tank ResPublica.

The report, Markets for the Many: How civic finance can open up markets and widen access, calls for the introduction of a US style Community Reinvestment Act which requires all banks to reinvest in their local economies.

It says that since the financial crisis lending to SMEs has fallen by 29% so Community Development Finance Institutions (CDFIs) could ‘fill the void’ left by mainstream finance.

Adam Wildman, research manager at ResPublica and co-author of the report, said: ‘Community finance could easily become the backbone of our economic renaissance. With the economy finally turning the corner, the conditions now exist for our SMEs to thrive and expand. But what is currently lacking is the credit our small businesses desperately need to do so.

‘If the Government were to truly support community finance by introducing the right support mechanisms, we could well witness a new wave of entrepreneurship and generate widespread prosperity. We recommend both the Government and the Opposition throw their weight behind the introduction of a UK Community Reinvestment Act to ensure this takes place.’

Between 1996-2009, the act produced $68.5bn of private investment in the US between 1996-2009. The report argues that similar legislation in the UK would ‘dramatically’ boost private investment in this country.

It also calls for the extension of the Credit Union Expansion Project to include CDFIs.

Peter Kelly, director at Unity Trust Bank, said: 'CDFIs play a vital role in promoting enterprise and creating jobs, yet the opportunity exists for so much more to be achieved. The responsibility and role of the high street banks is currently unclear. On the one hand their CSR departments support CDFIs, credit unions and money advice agencies to help people in the clutches of the high-cost lenders.

'Yet at the same time the high street banks provide commercial funding to the high cost lenders themselves. The status quo needs to change and Community Reinvestment Act type legislation would create the constructive dialogue and practical action that has been missing for far too long.'

SIGN UP
For your free daily news bulletin
Highways jobs

Pre-School/Nursery Assistant

Essex County Council
Up to £13.00 per hour
Pre-School/Nursery AssistantPermanent, Part Time£13.00 per hourLocation
Recuriter: Essex County Council

Preschool Nursery Assistant - Level 3 Qualified

Essex County Council
Up to £13.00 per hour
Preschool Nursery Assistant - Level 3 QualifiedPermanent, Part Time£13.00 per hourLocation
Recuriter: Essex County Council

Trading Standards Project Officer - Tobacco and Vapes

Essex County Council
£26601.0000 - £31295.0000 per annum
Trading Standards Project Officer - Tobacco and VapesFixed Term, Full Time£26,601 to £31,295 per annumLocation
Recuriter: Essex County Council

Social Care Worker - WMF2272e

Westmorland and Furness Council
£34,434 - £35,412
We have an exciting opportunity, for a passionate, enthusiastic person Cumbria / Various
Recuriter: Westmorland and Furness Council

Apprenticeships & Intermediate Labour Market Coordinator

The Royal Borough of Kensington & Chelsea Council
Negotiable
Create real opportunities for local people and help shape a fairer future. As an Apprenticeships and Intermediate Labour Market Coordinator, you'll wo England, London, City of London
Recuriter: The Royal Borough of Kensington & Chelsea Council
Linkedin Banner