When Congress wrote the Community Redevelopment Act in 1977, banks were brick-and-mortar institutions and the law could tell them to make credit available to low-income borrowers in their communities.
Twenty-five years later, a goodly number of banks are anything but brickand- mortar institutions.
Some like the Charles Schwab Bank that opened last month in Reno expect to do a lion's share of their business over the Internet and telephone with customers across the nation.
But the Community Redevelopment Act applies to those banks just as it does to traditional institutions.
And that will be a boon to lowincome borrowers in northern Nevada during the next couple of years as the Schwab Bank has committed $20 million to community reinvestment in the area.
Even before the bank opened on April 28, Schwab representatives had met with representatives of two dozen community agencies to figure ways that the bank could support existing programs for low- and moderate-income borrowers.
Nancy Muniz, branch and community developer in Schwab Bank's Reno office, noted that many of the new bank's community reinvestment programs will hook into efforts undertaken by other financial institutions.
"A lot of the banks here have done some great stuff," she said.
And Richard Kenny, chief executive officer of the bank, said the company is driven by more than regulators' interest in community reinvestment.
"We want to make sure we're good citizens in the Reno market," Kenny said.
"It's really rewarding; it's a great thing to do."
The bank's big push into the mortgage business, meanwhile, posted impressive numbers in the first days after the bank opened.
Kenny said the bank approved $56 million in mortgage loans during its first four days in business and handled another $8 million in pre-approved loans.
As it wrapped up its first week, Charles Schwab Bank had another $165 million in mortgage loans in the pipeline.
Schwab has contracted with a outside company, one with 10 years experience in private-label lending, to handle the details of the mortgage business.
The dozen employees of the bank in Reno manage that contract, make decisions about loans that fall outside normal underwriting criteria and manage the Reno branch office.
Because the company is working with a third-party vendor for the mortgage services that are its first priority, it does not expect employment at the Reno office to grow rapidly.
The Reno branch office, Kenny said, will on individual accounts.
"We are a retail-focused business.
We're not a commercial bank.We'll not be competing for commercial lending or commercial checking business," he said.
When Charles Schwab Corp.
decided to launch a banking operation, Kenny said it chose Reno for three reasons:
* The company wanted a headquarters relatively close to its San Francisco headquarters.
Charles Schwab, the founder of the brokerage company, is chairman of the new bank and will be traveling to Reno to over see its operations.
* The business climate in Nevada particularly its business taxes are attractive for a new company.
That holds true even with several of the tax packages now before the legislature, Kenny said.
* The availability of skilled banking staff with a good work ethic.
