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What are Minority Depository Institutions (MDI)?
The FDIC provides the following information on its Minority Depository Institutions Program, Section 308 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) requires the Secretary of the Treasury to consult with the Chairman of the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Chairman of the National Credit Union Administration, and the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation on methods for best achieving certain goals for preserving existing minority depository institutions and promoting creation of new MDIs, including providing training and technical assistance.
The FDIC’s Policy Statement defines “minority depository institution” as any Federally insured depository institution where 51 percent or more of the voting stock is owned by minority individuals. “Minority” as defined by Section 308 of FIRREA means any “Black American, Asian American, Hispanic American, or Native American.” The voting stock must be held by U.S. citizens or permanent legal U.S. residents to be counted in determining minority ownership.
In addition to institutions that meet the ownership test, institutions will be considered minority depository institutions if a majority of the Board of Directors is minority and the community that the institution serves is predominantly minority. Institutions that are not already identified as minority depository institutions can request to be designated as such by certifying that they meet the above definition. Institutions interested in the MDI designation should contact the National Director of the FDIC’s Minority Depository Institutions Program.
The FDIC’s Statement of Policy Regarding Minority Depository Institutions (MDIs) outlines two definitions of how FDIC-insured commercial banks and savings associations may qualify for MDI status. An MDI may be a federal insured depository institution for which (1) 51 percent or more of the voting stock is owned by minority individuals; or (2) a majority of the board of directors is minority and the community that the institution serves is predominantly minority. Ownership must be by U.S. citizens or permanent legal U.S. residents to be counted in determining minority ownership.
The FDIC maintains a list and tracks the insured MDIs it supervises, i.e., state-chartered institutions that are not members of the Federal Reserve System (Federal Reserve), as well as MDIs that are supervised by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve. The FDIC takes this broad approach given its role in considering applications for deposit insurance and in resolving institutions in the event an MDI were to fail, regardless of the institution’s charter. The FDIC’s published list of FDIC-insured minority depository institutions does not include women-owned or women-managed institutions because they are not included in the statutory definition.
MDI Programs include the following:
Mission-Driven Bank Fund
The FDIC is standing up the Mission-Driven Bank Fund to help channel private investment in mission-driven banks – FDIC-insured MDIs and Community Development Financial Institutions (CDFIs) – to build size, scale, and capacity in these banks. These institutions already play a significant role in the minority, low- and moderate-income, and rural communities they serve. Investments by the fund will enable them to have a greater impact in their communities by providing affordable financial products and services, stimulating economic and community development, and building opportunity and prosperity.
Capital Estimator for Mission-Driven Banks
The federal bank regulatory agencies have developed a capital estimator that will enable mission-driven banks to approximate the impact of additional capital on various capital ratios. Many FDIC-insured MDIs and CDFIs, known as mission-driven banks, are considering raising capital from private companies, large banks, or through the U.S. Department of the Treasury’s Emergency Capital Investment Program. This tool can be used to conduct “what-if” scenarios on various components of your bank’s capital stack.
The FDIC provides interested parties the ability to locate FDIC-insured MDI or CDFI bank headquarters and branches on an interactive map: MDIs and CDFI banks across the United States