More Than Half a Million Transactions Help Tell the Story of Community Investment
At the Federal Reserve Bank of St. Louis’ community development division, researchers recently unveiled a new tool: The Community Investment Explorer has data from more than 500,000 community development transactions, going as far back as 1987, that are sortable by year, investment purpose, and state or metropolitan area. The three sources: the work of community development financial institutions (CDFIs), the New Markets Tax Credit (NMTC), and the Low-Income Housing Tax Credit (LIHTC).
It’s a timely effort, as the federal budget proposed by House Republicans proposed to nix the NMTC program as well as a key component of the LIHTC program.
“We know there’s a lot of groups, be it affordable housing developers, CDFIs, tax credit investors, in addition to policymakers, interested in this information and to see the stories this data tells,” says Mike Eggleston, a community development specialist at the St. Louis Fed who oversaw the project.
As secretive and opaque as the financial world remains, there is more publicly available data on the sector in the U.S. than just about any other in the economy. In combination with laws like the Community Reinvestment Act (CRA) and good old-fashioned community organizing, financial sector data have helped communities fight back against historic discrimination by banks and other lenders.
You can look up how much in deposits are held in every single federally insured bank branch in the country, updated annually. You can look up the financials for all 5,000 regulated banks in the country, including total deposits, total loans and other assets, income statements and more. You can find the same for the nation’s 5,600 federally insured credit unions. You can also easily find how much is currently invested in stock markets and bond markets and how much more was invested in the past year.
When it comes to lending, you can look up every home mortgage application, including those that were denied, and sort them by geography or race, to uncover disparities. A pending rule from the Consumer Financial Protection Bureau (CFPB) could potentially make similar data available for small business loan applications. Starting in 1989, CRA examinations became public, providing detailed accounts of banks’ attempts to satisfy their CRA obligations to meet the credit needs of low- and moderate-income communities. You can find those examinations at the websites of the FDIC, Federal Reserve, or Office of the Comptroller of the Currency.
But just because data is available doesn’t mean it’s automatically useful, or user-friendly. As part of its mission to maintain the integrity and stability of the financial system, researchers at Federal Reserve Bank branches around the country have put time and resources into making financial and other data more useful to more people. The Federal Reserve Bank of St. Louis is something of a leader among the 12 branches in this space; it’s the home of FRED, a massive treasure trove of constantly updated graphs and charts that dig deep into many data sources, including those above, and present them in a more accessible way.
The new Community Investment Explorer builds on that existing tool set from the St. Louis Fed, shedding light on some interesting patterns, like some huge disparities in the amount of CDFI activity among the largest metros in the country. As you might expect, places like NYC, Los Angeles and Chicago lead the way on CDFI investment — yet Houston and Dallas are far behind smaller metros. Miami and Atlanta are lagging too.