S&C Advises on Minority-Focused Programs Aiming to Close the Wealth GapJuly 7, 2021
Racial inequality remains linked to inequities in economic opportunity. Black, Hispanic-Latino and other under-represented minority and women entrepreneurs have a harder time gaining access to the capital needed to grow their businesses. Of the more than seven million American households that do not have access to a bank account, the majority are Black and Latino households, which are disproportionately without either a savings or checking account.
S&C has advised on several recent, impact-driven initiatives designed to open economic access to underserved and low- to moderate-income areas and individuals, including:
- Bank of America's commitment of more than $250 million to 90 investment funds across the U.S., in less than a year, as a component of Bank of America's $1.25 billion, four-year commitment to advance racial equality and economic opportunity. These funds focus on investing in minority-led businesses and are predominately led by diverse fund managers. As a result of “the need for more capital in funds led by diverse managers as well as the need for more growth equity funding for the minority entrepreneurs they support,” Bank of America recently increased its target for investment in these funds from $200 million to $350 million.
- The U.S. Treasury in connection with the establishment of the Emergency Capital Investment Program. The program will provide up to $9 billion in preferred stock or subordinated debt capital to a broad range of Minority Depository Institutions (MDIs) and Community Development Financial Institutions.
- Lafayette Square on formation, regulatory and fundraising matters. Lafayette Square is an impact-driven, minority-owned investment platform with a mission to confront critical societal challenges with targeted investment strategies that drive measurable change and positive social impact in areas of housing, jobs and financial inclusion. Lafayette Square is minority-owned, with employees owning over 90 percent of its equity and was launched with $100 million in financing from Morgan Stanley.
- Banco Popular and Wells Fargo in investments in Atlanta-based Greenwood, a digital banking startup designed for Black and Latino consumers and businesses. Greenwood plans to offer non-predatory loans, as well as the ability for customers to round up purchases and donate what they save to organizations aimed at advancing their communities.
- Wells Fargo in 12 investments in minority-owned banks as part of its March 2020 pledge to invest up to $50 million in Black-owned banks. To date, Wells Fargo has invested in 11 MDIs in Georgia, Louisiana, Michigan, Texas, California, New York, Tennessee, Alabama, North Carolina and South Carolina. As part of the capital investment, the banks will have access to a dedicated Wells Fargo relationship team that will provide financial, technological, and product development expertise in order to help each institution grow and benefit their local community.
S&C lawyers advising in these matters include: Rodge Cohen, Mitch Eitel, Jared Fishman, Aisling O'Shea, Whitney Chatterjee, Ron Creamer, Eric Wang, Ben Weiner, Don Toumey, Eric Diamond, Andrew Mason, Ana González, Daniel Loeser, Daniel Wolf, Brandon Ferrick, HK Kim, Nati Hyojin Kim, Kristin Deliso, Chiyel Hayles, Beini Chen, and Ayoung Kim.