By Mike Vallante
As the former Associate Administrator at the U.S. Small Business Administration, and having consulted with many non-profits around the country, I have witnessed many corporate moves that promise grand impacts on the communities they serve. However, the recent announcement by Capital One regarding its $265 billion community benefit package in connection with its acquisition of Discover Financial Services stands out as a particularly commendable initiative.
Late last month, Capital One unveiled a commitment that could redefine the landscape of corporate responsibility and community investment. Over the next five years, Capital One has pledged $265 billion towards lending, philanthropy, and investment, with a substantial focus on maintaining and enhancing support for low-and-moderate income (LMI) communities. This commitment includes a promise to sustain $200 billion in lending to LMI consumers and communities—a remarkable vow that highlights the bank’s dedication to fostering economic inclusion.
In an era where consolidation often sparks fears of reduced services and job cuts, Capital One’s plan counters these concerns head-on. The bank has committed to retaining Discover’s sole branch in Delaware and ensuring that no branches will be closed as a result of the acquisition. Furthermore, Capital One plans to keep 30% of its branches and cafes in LMI neighborhoods and has pledged no cuts to front-line staff. These commitments are not just symbolic; they represent tangible assurances that local access to banking services and employment opportunities will remain robust.
One of the most significant aspects of Capital One’s community benefit package is its $35 billion commitment to affordable housing for LMI communities—a 30% increase over previous plans.
This investment will provide crucial support for affordable housing initiatives, which are essential for addressing the housing crisis that disproportionately affects lower-income families. Additionally, the package includes significant funding for small business lending and educational programs, further underlining Capital One’s comprehensive approach to community support.
The magnitude of this community benefit package is notable. According to the National Community Reinvestment Coalition (NCRC), it is more than twice as large as any previous community benefits plan. This comprehensive package was clearly demonstrated by Capital One’s work with 800 community partners led by the National Association for Latino Community Asset Builders (NALCAB), NeighborWorks, Opportunity Finance Network (OFI) and the Woodstock Institute. This unprecedented level of commitment could help address critics’ concerns and make the acquisition more acceptable to regulatory bodies such as the Federal Reserve and the Office of the Comptroller of the Currency. By demonstrating a clear and substantial commitment to community investment, Capital One is setting a new standard for corporate responsibility in the banking sector.
Opponents of the merger worry that it might lead to diminished services and increased costs for consumers. However, Capital One’s proactive measures to maintain branch access and invest in community-focused programs suggest a more balanced approach. The integration of Discover’s card payment network and the creation of the largest U.S. credit card issuer by balances could indeed enhance competition in the payments industry, potentially benefiting consumers with better services and more competitive rates.
In conclusion, Capital One’s community benefit package represents a bold and commendable step towards promoting economic equity and supporting underserved communities. By prioritizing substantial investments in LMI neighborhoods, maintaining local branches, and enhancing affordable housing and small business support, Capital One is not only addressing concerns but also setting a high bar for future corporate commitments. This approach is a model of how large-scale financial transactions can be leveraged to generate significant positive impacts on communities nationwide.
About the Author: Mike Vallante is the former Associate Administrator for U.S. Small Business Administration and strategic consultant to non-profit organizations throughout the United States.
Be the first to comment