Banc of California Inc. announced Tuesday that it is committing to create a $200 million fund that will make investments guided by community leaders, including former Los Angeles Mayor Antonio Villaraigosa.
Steve Sugarman, chief executive of the Irvine bank, made the announcement at the Clinton Global Initiative America 2015 conference in Denver. He said Banc of California, which has executive offices in Beverly Hills, will partner with at least 12 other California lenders to raise the fund over the next three years.
The fund will target investments in affordable housing, community development, small business lending and financial literacy, and plans to enlist community leaders to help connect local entrepreneurs with funding.
Banc of California Chief Executive Steve Sugarman credited Villaraigosa, a member of the bank’s advisory board, for inspiring the community investment fund.
“Mayor Villaraigosa really raised to our attention the need to partner with key community groups,” Sugarman said. “We think it’s critical that the dollars get to the places where they’re needed most. We wanted to put together a panel with the community leaders who can provide advice on which investments will drive the most impact in the community."
To that end, Villaraigosa will co-chair the fund’s community advisory panel alongside Paulina Gonzalez, executive director of San Francisco’s California Reinvestment Coalition. The coalition, a bank watchdog group, initially opposed Banc of California’s purchase last year of branches and assets from Puerto Rico’s Popular Community Bank, but later supported the transaction after Villaraigosa helped broker a deal.
“This fund is about collaborating with groups banks have historically seen as adversarial and instead, partnering with them,” Villaraigosa said. “We’ve had this community reinvestment obligation since the 1970s, but too many have oftentimes looked at it as an obligation and not an opportunity.”
Former President Bill Clinton echoed that sentiment when he spoke after Sugarman announced the commitment, saying the Community Reinvestment Act, the legislation requiring banks to serve lower-income communities that the mayor referenced, “was enforced with widely varying vigor.”
That’s the paradigm Banc of California wants to shift, using the Clinton Global Initiative platform to help recruit other banks to follow suit. Banc of California’s financial commitment to the fund will depend on the level of participation from other banks.
“The way this works is that you have to put your own money up first,” Villaraigosa said. “We put up our own money and now we are asking other banks to match.”