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FEDERAL
RESERVE
BANK OF ATLANTA
VOLUME
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15, NUMBER 2, 2005
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Banking on
Remittances:
Extending
Financial Services
to Immigrants
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Bankruptcy
Reform
Legislation
Sustainability
and Scale:
New Buzzwords
or Tools for
Survival?
Protecting Our
Military from
Predatory
Lenders
partners
i n community and economic development
PAGE
10
Louisiana SBA Chief Stages Turnaround
An interview with the SBA's District Dir ector in th e
Louisiana District Offi ce on how its ran king moved
from wo rst to first in the co untry amo ng middle-s ize
SBA offi ces.
PAGE
12
Bankruptcy Reform Legislation
Th e Bankrup tcy Ab use Prevention and Consu mer
Protection Act of 2005 has s ignifi cant implicatio ns
for both cons ume rs and small bus in esses.
PAGE
15
Sustainability and Scale: New
Buzzwords or Tools for Survival?
Scarce reso urces a nd market forces are requ iring
PA G E
2
community development organizations to focus on
maximizing inte rnal effici enc ies and leveragin g
The Ghost Box Dilemma: Communities
Cope with Vacant Retail Property
resources th roug h alliances that benefi t th e co mmunities being served.
The rapid expansion of big-box retailers
across the country has prompted many
communities to reassess the potential
negative impact when these busin esses
close or relocate to newer retail spaces.
PAGE
18
Protecting Our Military
from Predatory Lenders
Anti-predatory lending legislation has been proposed to
protect mi li tary service persorn1el and their dependent:s
from the unethical lending practi ces of fringe financial
service providers.
FEATURES
PAGE
PA G E
6
Banking on Remittances: Extending
Financial Services to Immigrants
20
Spotlight on the District Alabama and North Florida
Programs in Alabama and
orth Florida promote
Financial institutio ns in newly emerging gateway cities
economic growth that helps to stabilize rural and
for immi grant popul ations must explore innovative
urban commu nities .
ways to provide products and services that s uccessfully meet the needs of th is clientele.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Is Affordable Housing Facing Extinction?
Lately it seems you can't open a newspaper witho ut
Yes , there are c lear win-
read ing about rapid increases in rea l estate values all
ners when property values
over the country. According to the Office o f Federa l
climb; however, not every-
Il ousing Enterprise Oversight, the housing pr ice index
one benefits. Condo con-
(IIPI) climbed 12.5 percent over th e pas t 12 m onths,
versions may force people
and housing app reciation during the las t year and a
out of the i r apartments,
half was th e highest in 25 years.
l eaving th em with li mited
housing alternatives. This
Whil e many slates reported more modest growth in the
d ispl ace ment can accel-
IIPI, several record ed increases over 20 percent in j ust
er ate negati ve gentri ["ica-
one year. In the Sixth Federal Rese1ve Dist r ict, Flor-
tion and qui ckly change th e fabric of a community.
ida, w here th e overall housing pri ce clifferenl.i al was
21.42 per cent higher than the year before, rank ed fifth
Exi sting prope1ty owners are likely to face higher real
behind Nevada, California, Hawaii , and the District of
estate taxes. Though some markets have se t caps on
Columbia. Coastal areas such as Mel bourne, Sarasota,
tax increases or created incentives to protect existing
West Pal m Beach, and Miami registered some o f the
homeowners, especially lower income households, these
most dramatic spi kes.
programs are the exception rather than th e norm .
So who is benefi ting from this phe nomenon? Current
Those in the market for the first time are possibly most
homeowners who now show greater wealt h on paper
affected by escalati ng home prices. \Vhat's afford able
are the first group th at comes to mind . However, they
one clay may be ou t of reach the next Poten tial home-
would have to sell th eir homes to reap the rewards of
buyers may have to strut looking in less desirable ru·eas
this double digit appreciation; and un less a homeowner
to find affordable property.
relocates to a cheaper area, moving is not usually a
There is no clear evid ence that appreciation of home
viabl e option.
pr ices w ill slow clown at1ytime soon. In some markets
Landlords who opt to sell their single-family i.1westment
the damage is already clone, and should interest rates
dwellings rath er than k eeping them as renta l property
become higher, housing may become th at much less
also benelit. Sale of rental prope1ty doesn't stop at the
affordab le. Th ese are some new cha llenge commu-
detac hed single-family hom e: owner s of mul ti-family
nit y development practitioners face.
apa1tmenl buildings are transfomling units into condominiums for sale.
Th e rap id increase in property values has also altractecl
speculators who can pmchase homes sight Lmseen and
resell them for a profit, sometin1es with out even making
U1e first loan payment. This type of activity fw ther exac-
Juan C. Sanchez
erbates the situati on.
Commun ity Affairs Officer
FEDERAL
RESERV E BANK
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Federal Reserve Bank of St. Louis
OF
ATLANTA
on e
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Federal Reserve Bank of St. Louis
BIG-BOX STORES ARE A FAMILIAR PRESENCE IN COMMUNITIES NATIONWIDE.
INCREASING NUMBERS OF CHAIN ESTABLISHMENTS, CHANGING CONSUMER
PREFERENCES , AND GROWTH IN THE RETAIL INDUSTRY HAVE LED TO AN
ABUNDANCE OF RETAIL SPACE. THIS RAPID EXPANSION HAS ALSO MULTIPLIED
THE NUMBER OF VACANT BIG BOXES LITTERING THE LANDSCAPE.
Wal-Mart, Kmart, Home Depot, and Office Depot, are
rai1ge of subsidies included reduced prices for land, infra-
a few of the big-box retailers that have become house-
structural assistance, prope1iy tax abatement, state cor-
hold names. While these retailers have different store
porate income tax credi ts, ai1d tax-inc rement financing.
prototypes , each occupies a co nc rete "big box" of
These policies ai-e now being questioned as more com-
25 ,000 to 100,000 square feet whi c h is usuall y s ur-
munities re-evaluate the positive ai1d negative impacts
rounded by acres of su rface parking lots. At the far
of big-box retail. One of the primary concerns is the
extreme is the Wal-Mart Super Center, which is typical ly
rapid growth of vacai1t big-boxes as re tailers that were
about 220,000 square feet.
once lured to communities depart or relocate to newer
Big-box retailers can anchor conunercial centers or be
retail spaces.
freestanding. A commercial center consisting solely of
big-box retailers is known as a "power center. " InHia.lly
big-box retailers sought rural or suburban locations that
The rise of ghost boxes
Vacant big boxes, or "ghost boxes" ai·e on the rise for
offered large tracts of inexpensive land to acconunodate
several reasons. First, develop e rs created a n abu n-
their building and parking requirements. These locations
dance of retail space during the past two decades, and
also all owed the retailers to reac h a large r, and ofte n
in some co mmuniti es retail space now exceeds t he
underserved, market area.
capacity of loca l markets to support il. Seco nd , poor
RecenUy, however, big-box retailers have sl:a.tied exploring urban markets. Wal-Ma.ii ai1d Home Depot, for exai11p le, have both begun developing a smaller neighborhood
fom1at in hope of gaining access to dense urbai1 areas.
economic performance has forced retail e rs to close a
number of their stores.
Kmart has closed over 600 stores s in ce it declared
bankruptcy in 2002. Other large retail ers including JC
Penny, Montgomery Ward, Sears, and vario us grocery
Assessing the impact of big-box
chains have also been forced to close so me o r all of
retailers on local communities
their stores as a res ul t of finan cial trouble .
Local conmmnities irutially recruited big-box retailers
Discount retailers ai·e also chai1gi.ng their store fom1ats
to increase property and sales tax revenues ai1d to meet
and abandoning existing bui ldings for much la rger mega-
growing consw11er needs. Some communities assisted U1e
stores. Wal-Mart's ne w super centers arc us ua lly twice
retailers or the developers with infrastructural improve-
the size of their discount stores and have expanded to
ments, while others used tax incentives to encourage
include a full-service grocery store.
development in their conumutities.
Wal-Ma.ii CLUTenlly has 350 buildings available for sale
A 2004 study by Good Jobs First (www.goodjobsfm,t.
org) identified 244 Wal-Mart stores that received publi c
or lease. According to its website, the company is planning to contin ue its aggress ive growth and expects to
subsidies totaling over $1.0 billion from communiti es
open 530 new sto res in the coming year. Of these new
where they opened stores or dist.tibution centers. This
sto res, 160 will involve expans ion o r re lo cation of
FEDERAL
RESERVE
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Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
th re e
big-box retailer can thus trigger the decl ine of an entire
shopping center.
Finally, th e local economy may expe rience a loss of
tax revenues when a retailer pulls out. Property taxes
may decl in e if the s pace remains vacant, a nd s ignificant loss of sales tax is like ly if th e departure of the
retailer triggers loss of other businesses as well. The
many comm un ities that have used pub lic s ubsidies to
lure big-box retailers at the expense of local business
are especially vu lnerable.
Communities have transformed abandoned big boxes
for creative uses. This Kmart in Austin, Minnesota , was
converted to a "Spam Musuem ."
Adaptive reuse of ghost boxes
Vacant big boxes present a new challenge for commu-
existing stores, thus ensuring conti nuous generation
nities as they search for creative ways to reuse the
of Wal-Mrut ghost boxes.
space and try to limit the negative effects of existing
Wal-Mart's un ique business strategy also contri butes
Lo the increase in empty stores. In grow ing areas the
and fu ture vacancies.
Numerous comm unities across the country ru·e mru1ag-
company has so metimes opened two sto res in close
ing to reuse big-box space. In some cases, other retailers
prox imity in order to capture the maj ori ty of sales in
have absorbed the space. For example, Wal-Mart has
the mar ket. Conflicting rationales have been cited for
establi shed a partners hi p with Hobby Lobby, Tractor
this strategy. Wal-Mrut's rurn ual report says this approach
Supply Company, and Burlington Coat Factory Lo reuse
allows them to more than do uble their sales in the ru·ea.
vacan t Wal-Mruts. Over the past ten years these retailers
Other studies indicate that close prox imity of two
have pu rchased ove r 100 vacant Wa l-Marts and con-
s tores creates intern al competition because managers
!mow U1at only the most profitable store will swvive. The
ve1t ed the space Lo meet their store requirements.
Wal-Mart has created its ow n realty di vision
net effect of this strategy, however, is heightened poten-
(www.walrnarLrealLy.com) to mru·ket their vacant prop-
tial fo r empty stores, often at the expense of the smaller
erties. In addition to leasing ru1d sales, this group provides
and independent retailers that ru·e unable to compete.
mru·ket reseru-ch and construction services to help new
Ghost boxes weigh on communities
local gove rnment to id entify businesses Lhat might be
tenants make use of the space. Wal-Mart also works with
Vacant big boxes can have a negative impact on the
interested in the space when Wal-Mmi vacates. Wal-MaJt's
commu nit y landscape as well as on neighboring busi-
website cites that it recycled over 15 million squru·e feet
nesses. AbaJ1doned builclings and empty parking lots ru·e
of space last year and contends that in do ing so it has
not only unsighLly, but they also become ta rgets for vru1-
developed another business opportunity.
dais and attract other undesirable ac ti vities. The empty
\\Th en retail business isn't the most effective use for
space also becomes a visible sign of economic decline
vacant big boxes, conrn1unities must explore other ere-
and disinvestment.
ative strategies fo r the space. For example, big boxes
In addition to the visual impacts, de pmture of a lru·ge
have been conve rted to government co mplexes, call
retailer may strain other area businesses. Surro unding
centers, schools, churches, auto dealerships, storage
bus in esses often rely o n traffi c ge nerated by larger
facilities, medical fac ilities, museun1s, recreational facil-
retailers, so when the retai ler departs or relocates, the
ities, and office space.
dependent businesses may be in jeopardy as well. Smaller
In Lee Coun ty, Florida, two form er K.!11 ru·t stores are
retailers in shopping centers may hold leases that allow
being co nverted to schools . The stores fi t the proto-
them to vacate if the ancho r tenant departs . Loss of a
type fo r the school distri ct's elementary schools, and
fou r
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Federal Reserve Bank of St. Louis
VOLUME
15,
NUMBER
2
the conversion is expected to take only half the time
development on jobs, tax revenue, infrastruct1.ffc, or exist-
of new construction .
ing businesses ptior to approving new development.
The City of Los Angeles recently passed an ordinance
Challenges to adaptive reuse
requiring big-box retailers with a grocery component to
Some communities have been very successful in reus-
conduct a community impact study that includes a plan
ing their vacant big boxes, while others have struggled.
for re-leasing, reusing, or selling vacated prope1ties. Some
Smaller stores (under 30,000 square feet) are usually
conmmnities have passed ordinances requiring retailers
easier to adapt than those over 50,000 square feet. lt is
to assist with the costs of building demolition if a store
also easier to re-lease a store located in a prime location
remains vacant for a long period of time.
with good parking, infrastructure, and road access, and
in close proximity to other successful retailers.
A number of problems arise in attempting to recycle
In other exan1ples, cities are requiting retailers to notify
city officials in advance when they intend to vacate a
property arid to main tain it Lmtil it is re-occupied or sold.
vacant big boxes. First, most retailers have a store proto-
In Peachtree City, Georgia the city passed an ordinar1ce
type that is llllique. Therefore they reject existing vacant
that prohibits retailers from vollllltarily vacating a build-
space because it does not meet their store format requit·e-
ing while preventing occupar1cy by another tenant.
ments. For exan1ple, since Wal-Mart has a larger forn1at
In addition to regulatory restrictions on development
than Kmart, it is not a candidate to relocate in the 600
of new big boxes, some conm1unities ar·e creating finar1-
vacant Kmart stores. Retailers often prefer building on
cial incentives for the reuse of existing buildings. In South
vacant lane! instead of incurring the cost to rehab ilitate
Carolina, legislation was proposed recently that would
existing space.
offer tax credits to developers fo r re using vacant stores
Secondly, retailers may place restrictions on which
lar·ger than 100,000 square feet.
tenants can occupy their space when it becomes vacant.
Some may continue to pay rent to keep a competitor from
moving into their space, thus red ucing the lancllorcl 's
Looking ahead
Big-box retailing has changed consumer shopping and
incentive to re-lease or adequately maintai n the prope1ty.
altered the lar1dscape of conmmnities. With no foresee-
Finally, retail may not be the best use of the vacated
able end to the growth of mega-stores, ghost boxes wi ll
space. For landlords, this poses an additional concern if
continue to multiply and present challenges for their
they rely on income fro m national retailers to support
host communities.
their shopping centers. However, converting space to a
First, con1111llllities must identify creative uses for exist-
different use presents a challenge. Only a few businesses
ing ghost boxes. Second, they must ens me that any adcli-
neecl the ar11ollllt and type of space left behind by these
tional development is managed in aclvar1ce to minimize
mega-stores, but it can be expensive to convert the space
the number of future ghost-boxes and their negative
to a different format and use.
impacts. Finally, communities must evaluate whether
continued growth of the national big-box retail industry
How else are communities coping?
is desirable, or whether alternative strategies might exist
Despite exar11ples of innovative models for reuse of
vacated big boxes, more c01rn11unities are starting to con-
to enco urage more sustainable long-term economic
growth for their businesses arid residents.
♦
sider the potential impact of large retail developments
before they are built. Some conm1mlities have instituted
size caps that limit big-box development or ban additional development once a pre-detennined linlit is reached.
A number of conm1unities are now requiring retailers
Th is ar ticle was written by Jessica LeVeen Farr, regional co mmun ity devel opment manager al th e Atl ant a Fed's Nashvi lle
bran ch.
Readers can learn abou t other examp les of the adaptive
reuse of bi g boxes at th e fo ll owi ng we bsite: http ://www.
b igboxreuse.com
to complete comprehensive community and economic
studies that consider the impact of the prop osed
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
f i Ve
Banking on Remittances: Extending
Financial Services to Immigrants
F J U ) ~ RJDS:SUV.S :NO'J."B
.
AB 57187939 R
82
A
IMMIGRANTS IN THE UNITED STATES REPRESENT A LARGE AND GROWING MARKET FOR
FINANCIAL INSTITUTIONS, NOT ONLY IN TRADITIONAL PORTS OF ENTRY SUCH AS LOS
ANGELES, NEW YORK, CHICAGO, AND MIAMI, BUT ALSO IN NEWLY EMERGING GATEWAY
CITIES ACROSS THE U.S., INCLUDING DALTON, GEORGIA, AND NASHVILLE, TENNESSEE.
Banks can tap into this market segn1C'nl by offering new
focus group researc h exploring Mexican immigrants'
fin ancial products that cater specific-a lly lo immigrants·
remittance praclices in the Sixth District found that the
needs as well as providing typical banking services.
choice or a remittance se1vice provider is based on com-
Many im migrants regu larly se nd money bac k to th eir
pl ex, mu ll iple fac t o rs, including cost, exc hange rat e,
famil ies and co mmunities in th eir home cou ntries. In
speed of tran sm iss ion , delive ry m ec hani sms in I he
2004, over $30 bill ion in remitl ances wa::; sen l from the
immigrants' home country, as well as their ram i ly's
U .S. to Lal in A meri can countries v ia form al chann els
personal pre ferences.
such as wire lransfer se1vices, banks, and c-rC'd it unions.
WhilC' immigran ts in this study expressed interest
Remittance servi ces are an example of' an important new
in using remit tance products at financia l institutions,
product that banks hm·e begun to offer as an aven ue for
potential obstacles emerged su ch as l anguage and
develop ing relationships with the immign:rnl market.
Gai ning a foothold in this market, however, w ill require
more I han just providing rem ii l ance se rvices. Recent
six
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Federal Reserve Bank of St. Louis
c ultu ral barriers, id entifi cati on requ irem ents , and
i nsuffic ient in format ion or misin forma ti on abo ut
fin ancial in st i i ut io ns.
VOLUME
15,
NUMBER
2
Barriers to using banks
fe lt th ey had not. been clearly informed about se 1vices
To gain a better understanding of Mexican inunigrant:s'
and fees associated with having a bank account. Most
percepti ons about remittance products and services avail-
paiticipants con.fusee! U.S. creclit muons wid1 the Mex.ic,m
able at mainstream fi nan ci al instituti ons, the Federal
cojos po pvlores and cojos cl e ohono and , because o f
Reserve Board sponso red focus groups in three cities
th e rep utation of th ese financial instituti ons and per-
across the Sixth Dist1ict (see sidebar on p. 9). The focus
sonal negative experiences, many were skep ti ca l about
groups also explored i.nunigrants' general perceptions
credi t unions.
and experiences regarding financial institutions. Although
many participants viewe d U.S. banks as reli ab le and
secure places to k eep their flmds, many did not have a
Sending money home
Wh en pa rti cipa nts w ere queried on how they se nt
bank account. The focus groups reveal ed several factors
money home to their families in Mexico, most reported
that impeded inunigrants' use of banks.
using w ire transfer companies, postal money orders,
Language and cultural barriers
Spanish-speaking personnel w ho can explai n financial
products and services and relate to a client's cultural and
personal situation were primary in determining w here
the Mexi can immigrants in the fo cus gro up cond uct
"I HAVE A BANK ACCOUNT RIGHT NOW BUT
I DON 'T LIKE TO KEEP A BIG AMOUNT OF
MONEY IN IT BECAUSE THE LICENSE I HAVE
th eir fin ancial transactions. But in addition to Spanish-
IS ABOUT TO EXPIRE, AND I AM AFRAID THAT
speaking staff, participants also wanted good customer
I WON 'T HAVE ACCESS TO MY MONEY IF I
service and convenient access to financial seivices.
DON 'T HAVE ANY IDENTIFICATION :'
Identification requirements
Many paiticipants expr essed concern over identifi ca-
and informal chan nels such as co uri er se rvices. A
tion requ irements. Immigrai1 ts cited prob lems related
few said t hey se nt money w ith friends and family.
Lo state dri ver's license laws, as we ll as to federal and
Several va ri ables influen ce d how r emitters sent
state laws governi ng bai1ks' accep tai1 ce of t he matrfcula
mon ey ho me.
consulai· (an ident.Uication docw11ent issued by the Mexican gove rnm ent for Mexican nationals) for identification purposes. Even several parti cipants with st at e
Local mechanisms
Some remittance mechaitisms were specific to a parti c-
li ce nses reported th at th ey did not plan Lo open a
ular location. For example , some parti cipa nts fro m
bank account. So me incorrectly beli eved th at, gi ven
Dalton, Geo rgia used "vans" or courier se1·vices that
th ei r immi gratio n status, they wou ld l ose access to
collect the remittance from the sender mid deli ver it (as
fun ds in their accow1t w hen the license expired. Others
well as additional packages such as letters or pictmes)
comme nted t hat wh en they tried Lo ope n an acco unt
directly to th e recip ient.
using the malrfcula, bank employees m isinformed them
that they were not permitted to use the doc ument, even
th ough lhe bai1k 's policy recognized th e malricula as an
acceptabl e form of identillcation.
Senders and receivers
M any par ti cipa nts ind icat ed that both th e remilte r
and the r ec i pient decide upon t he best r emittance
m echan ism for bo th parties. Some , however, base d
Insufficient information or misinformation
their met hod of remittance en ti rely on the ir families
lnsu.fficienL infmmation or misinformation about finan-
in Mexico, who were accustomed lo r eceiv ing funds
cial products and services were conu11on among the focus
in a partic ul ar manner an d p erceive d one meth od t o
group paiticipants. Among d1ose who used banks, several
be better th an anoth er.
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RESERVE BANK OF ATLANTA
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s e v en
Market conditions
Whr t hrr or not a bank exists in the rrcri vi ng family's
town o f rrsidencr was anothrr consicl rra ti on. In fact ,
about halJ of the parti cipants in Dalton and Florida C' ity
reportrcl that they srnt their rrmilla11crs to rural arras,
which ai·r less likely to have banking sr n ices to rrceive
the re mittance.
Choosing a remittance service
Paiiicipa11ts consisl rntly agrrrcl on thrse key characteristics for choosing a remi ttance providrr:
• Reputati on of provider;
• Total cost;
• Exchange ratr;
• Assurance that t hr recipir nt will rrc·r ivc the fu nds;
• Sprrcl of serv ice (sa111c clay or next cl ay avai lab ilit y);
• C'ustom cr sc1vicr.
Although the avai lability of Spanish-spraking stafT was
th e most irnpmiant condition for gett ing their business,
indicated that they would be intr rcsted, for rxainp lr, in
focus gro up part ic ipants stat r d that sr rvice and cost,
using a rcmitt ;:rnce product tha t included a "savings'' fra-
includ ing front-encl fees, exchange ratr, and back-C'ncl
turr to help accumu late' fu nds to send back home. T lw y
fees wrre nearly as significa11t. 1any reported that th ey
also li ked the idea of a product th at offe rrcl the oppor-
shopprcl for U1c most favorable exchangr rate. In aclcli-
1unity to pay their fa111 ily's bills (say, for utilities) directly.
tion thry said thry in,·csliga trcl chargrs by recei,-ing
Other pait icipa11ts approved of a rrmit:tai1ce product that
insti tut ions in Mrxico, for example l hC' money sc 1v ice
chai·ged a !lat fre irrespC'ct ive oft hC' valur o f the re mit -
businrss or ba1 1k, and used thi s info1111a t ion in drc icl ing
tance', and a few incl ica trcl a stro ng prefcrC' ncc for pro-
how to send their money.
cluc ts \\'ilh no back-rncl fres for th rir family members.
Using banks for remittances
Conclusions
Whi lr few partic ipants wc rr aware o f banks o fTr rin g
Banks in citi es like Los Angc lrs, Chicago, New Yor k,
remittance se1viccs, th ey ind ica ted that the avai lab ility
and Mia111 i have had clrcacles to acijust to immigrant cus-
of rrmittance products a11cl sr ,vices through financial
tomers, w hile banks in tlw new gatrway citirs have had
institutions could moti,·ate thrm to oprn an accou nt in
limited cxprri rnce working w ith immigrant commu n-
th e U.S.
it iC's, especiall y in provid ing products and se,vices sprcif-
Paiiicipants wcrr paiticulai·ly intercsl C'cl in account -to-
ically tailored to this cli rntele. Banks trying to attr act
account rernitta11ce products in which money deposited
th ese potrn ti al customr rs will ha,·e to be innovativr in
in a U.S. ban k accoun t by th r rem ittrr co uld thC'n be
rC'sponcl ing to challenges.
transfrrred to thr recipient's bank accou nt in l\lrxico.
Om foc us group findings re,·ealecl that banks do have
Th e ge neral prrcep t io n among part ici pants was th at
an advan tage compa rr cl with alt ernative sr rvi ce pro-
using ba11ks-at both ends o f th e tra11sac t ion-would be
v iders, howevrr. Dcspit r convr nt ional w isdom, w hi ch
a safer way to srncl money to their fan1ilirs.
contends that imm igrants distrust l ·.s. banks because
Whrn queri ed about remit1;:rnce products with innova-
th ey distrust banks in their homr countri C'S, our foc us
tive frat urcs, some of which to our knowlrdge havr not
group part icipants indi cated a high level o f' tru st in U.S.
yet brrn developed or offered by banks, maiiy paii icip;:rnts
banks. Furt herrn orc t hry imp li r cl th at thry may tru st
e i ghI
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Federal Reserve Bank of St. Louis
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15,
NUMBER
2
banks in i\Iexi('O that part1wr with l ·.s. banks. so that
trust is in essence transfeITed from tlw t ·.s. lnmk to the
i\lPxic-an-pai1nC'r bai1k.
Although lnmks cannot control th<' receiving count ry's
lin;m('ial se1Yi('C'S infrastn.1c-tun', whi c-h is o ft en a clri,ing
forn' in the c-hoice of remittan('e pro,·ider, t lwy do han:opt ions. For exam pl<'. bai1ks c-an now use th e FedACll
systl'm l o transfer money to i\lexic-o.
Banks can also reach out to immignmt communities
by working with community organizations ,met mentors
to lw lp biidge tlw language and c-ult ural gaps mid ensure
ac-c·t'ss to finmlC" iaJ education n'soun ·<'S and mat etials. I f
possible' bm1ks can also pa.11rn'r with appropriall' finan cial institutions in i\kxico to o f"fpr c-ompleml'ntaiy products and Sl'l"vic-es for both l '.S.-b,t'iPd imm igrant s mid
tlwir family mPmbers in th eir home country.
With a little' effo rt banks have th P op portunity to
attrac-t th e growing, prospering immigrant market. But
hanks may 11l'C'd to adjust tlwir produc-ts, SC'JYic-es, polic-ic's, and cu lture to c-o mpetl' with alt ern at i,·t' ser\'il"P
pro,·iclPrs-not just on plier, but also on the quality of
se1Yi<·<' and a('C-C' sibility-if tlwy want to pursue tlw
immigrant nuu·ket successfully.
♦
This a11iC'!C' ww; wrilt Pn by ;\laria1111P A. I lilgNt and .JC'anm' ;\I.
ll ogarth. fNIPral RC'S<'IT<' Board . ('onsumC'J" & Community
Affairs: Edwin .J. Lucio. FPderal HPsPJ"\l' Board, HPsc•1YC' Bank
OpC'raJions & Payment Systems: Sihyl llo\\PII, .Juan Sanc-hPz.
and \\'aynC' Smi th , f NIPral RPSl'J"\'l' Bank of Atlanta , SupC'r,·ision & Regulation, Communit~ ,\ffai rs: J·: lizal)('th ;\JcQuPrry,
FPdPral RC'sC'rw Bank of Atlanta , Hptai l PaynlC'nts Office'; Ana
( 'rnz-Tau ra, FPdPra l RPSPrve Bank o f At Ian ta , Miami Bnu1c- h,
Comm unity Affai rs; and .J pssic-a LC'\ '!'<'n f.'arr, FC'dPral RC'S<'IYC'
Bank of Atlanta, :\'ash,i ll C' Branch. Community Affairs.
Tlw analysis, comments, and c-oncl usions Sl't forth in this pn'sc'ntalion rppr<'SC'nl tile' work oftlw aulhors and do not indicatl' c·o11cu1T<'nc·l' oftlw FcclC'ral l?,•sP1vP Board, ll u• Feci<' ral
HC'SPI"\'!' Banks, or th ei r staff. MPnt ion or display of" a trademark . propriPlary proclucl, or firm in tlw l<' Xt by focus group
participants or 1he aulhors dol's 1101 c·onstitutP an l'ndorsl'lllC' lll or niticis111 hy the FC'clcral lll'SC'r\\' Sys1e111 an d clot's
not imply appro,·af to till' C'xclusion of otlwr sui tai>IC' procluc-ts
or firms.
RESEARCH DESIGN
The r findings are based on a qualitative re ar ch study
"Banking on lmmigra.nts: Increasing MarkC'l EfficiC'ncirs
for Consumers and Financial Institutions" co-authored
by employees of the federal Reserve Board and the
federal Reserve Bank of Atlanta The tudy, which was
presented at the Federal Reserve's 2005 Community
AITairs Research Conference, is available at: http://www.
chicagofed.org/cedric/files/2005_conf_paper_se ion:3 h
ogai1J1.pdf
To analyze immigrants' remittance behaviors, the federal
Reservr Boai·d contracted with the Metro Chicago IJ1forma.tion enter to conduct focus groups dwing the month
of December 200-I. Providing assistance were Urree commw1ity clevelopmC'nt orgailizations working with MC'xican
inunigrants and based in U1e Federal Rese1ve Sy l C'm's
iJs.1.h District. 1wo focus groups were held in collaboration with ea.ch of U1e following communi ty based organizations:
• The Georgia Project in Dalton, Georgia
onexi6n Americas in ashville, Tem1e ee ai1d
• The Everglade onui1unity Assoc iation in Plorida
ily, Plo1ida.
We cho e to conduct focus groups in these cities ba5<'d
on U1C' recent influx o f inunigra.nts wiU1in Uie Sixth District ai1d the cm-responding volume of remittance sent
by thrse immigrants. for exan1ple, between 1990 and
2000 the foreign-born population in Georgia and Temirsee grew by 233 and 169 percent, r e pectively (U.S.
Census). Moreover, a recent study e ti.mated that immigrants re iding in Plorida and Georgia., who remilt.C'd
$2,450 million and $947 miUion re pectively in 200:3,
make these tale the fourth and seventh large t ending remittances to La.tin America (Bendixen & Associate ,
2004). Thu the Federal Reserve's Sixth Di tri ct provides an opportunity to develop new lea.ming and information about immigrants' use of bank as well as
remiltai1ce products.
We focused our research on irnrnigrai1ts from 1exico
(both documented and llllclocumented) who send monC'y
back to Mexico at least once per year. We hose this
paiticular group for a nw11ber of reasons. Pi.rst, 1exico
is the large t recipi nt of remittances in Lalin Ame1ica
ai1d U1e aribbeai1, receiving $16.6 bi llion in 2004, wiU1
95 percent of remitlai1ces originating from the .S. in
2003.' Concentrating on tllis target group also allowed
us to analyze the recent growth in financial producL<;
aiid se rvi ces that target Mexican in1111igrants in U1e U.S.
as well as their fai11ilies in Mexico. finally, the Federal
Rese1ve System's trategic alliance wiU1 tl1e Central Bank
of Mexico, which provides international A I I se1vic s to
Mexico, expai1ded U.S. bailks' ability to serve Mexican
immigrants by oITeri.ng an alternative mechaii.ism to send
remittance at a low cost.
1 "Banking on Remittances"
(2005) (www.chicagofecl.org/cedric/
file 2005_conf....J)aper_session3_hogarth.pdf ); IADB (InterAmerican De,·elopment Bank) (2004) "Remittances: Key Sourc<'
of Capital for Latin America and the Caribbean," Issue Briefs
( www.iadb.org/exr/am/'200.J/ index.cfm?op=press&pg=6fl );
Bendixen & Associates (200.J) "Sending Money ll ome: Remittances to Latin America from the C.S., 200-l," (ww\\.iadb.orgtexr
remittance image . lap200.JSun-eyAnalysis~lay_l7.pdf)
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
nin e
Q&A
Louisiana SBA Chief Stages Turnaround
An Interview with Eugene Cornelius Jr., District Director,
U.S. Small Business Administration , Louisiana District Office
Louisiana recently claimed th e highest ranking in the
Partners: What was youi · initial overn ll assess ment
country among middl e-size offi ces in th e Small Business
of the Lou i si ana clisl1·ict as ii rnlales lo small busi-
Administration (SBA), and the number0 two ranking over-
ness clevelopment ancl expansion?
all. A little over a year ago Louisiana cam e in dead last.
Cornelius: l found a staff that was ready to assist me in
Enter Eugene Cornelius, Jr. w ho took over th e Louisi-
whatever way I needed. The staff here has a wealth of
ana District office in April 2004. With energy, enthusi-
knowledge and expertise. I fow1cl that the issue was how
asm, and vision Cornelius l ed the Lou isiana team from
to manage our r eso urces. Management needed to step
worst to fi rst in one short year. We spok e with Mr.
out of the way and let the staff do th eir jobs.
CorneUus to discuss the twnarouncl.
l also fow1d that the banking communi ty was very conservative. I fe l t that I had walked backwar ds in t im e!
Partners: H ow ore the off'ices evo luotecl? I s the mnk-
But then I got to know them and discovered that the SBA
ing basecl on loan volume alon e?
was not being a genuine paitner and was making it diffi-
Cornelius: No, actually it's not based on just one or
cult to do business. I listened to them and tri ed to tmder-
two characteristics. Th e offices are evaluated on the
stand what th eir needs were, w hat could I do within SBA's
number of l oans, the number or loans to targeted com-
ru les and regulations to m eet their needs and make i t
muniti es, and the number of l oans to women , minor-
easier to do business.
ities, veterans, intern ational, and ru ral communities.
Not on ly do they l ook at w heth er t he vo l ume has a
Partners: So ojle1' meeting wi th the bonkers oncl
high percentage of l oans in a targeted co mmunity, bu t
uncove1·ing lhei1' neecls, what chcmgecl?
at whether we 've succeeded in th e number o f l oans
Cornelius: Ed ucating new bankers about th e new ways
being ma.de to African-Americai.1s and Hispanics within
of doing busin ess. I assessed the business community
th at targeted community.
that was involved in trade and fo w1d that most of them
were not ready for traditional banking. They didn't have
Partners: Diel you clo anything clijfe1·enl l o tmget the
the documentation necessary for traditional lending. I
minority commu nity for small business lencling ?
di scovered a special niche for loans that were less than
Cornelius: Well, I targeted the business community at
$50,000, ai.1d that these loans were not cost-effective for
large as pa.rt of an effort to in cr ease Louisiana's eco-
the traditional banks to pmsue because of the an1otm t of
nomic development across the state. It just so happens
documentati on required. We ha.cl a real gap. That's w hen
that in casti ng the net a.cross the state and th e business
I began o fferin g the "Community Express" low cloc u-
community in general w e caught the largest gro up of
mentation loans that ai·e not conventional and ai·e tmcler
small businesses-minority-own ed businesses.
$50,000. Sin ce the local banks found t he loans too
Digitized ten
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15 ,
NUMBER
2
expensive-, I brought in outside banks to do th e $::i0,000
you'z,e put e111plwsis 011 teaching people 11011' to access
and unclc-r loans. Th ey\·c- figured out how to clo t hc-se
capita l, you 't'C' /Jmugill i II lenders who ccuz 11/(/kC' the
loans in a cost-effective manner.
small loans, a 11d you hold people acco1111tab/e.f<!I· goals.
Were the- local banks
mac1·7
No' They saw this as a way
Whal o//wr.f<1ct ors caII ./JOU sa.lJ hcn•e contribul<'cl to the
to develop excellent can didates for traditional banking
i naease i II l e11</ i 11g?
in Lhe future. Thc-y also understood my long-range- plans
Cornelius: I think that the- biggest contributor is outreach
of lc-ncl ing small amounts to build th e- business com mu-
l o th e- business communit y. I listened to what th c-y hacl l o
nity for com·c-ntional banking. They were comfortable-
say. I didn't go in th e-re- telling them that this is tlw gov-
leming this lencling to the experts. For c-xamplc-,
ernment, ancl this is what we hm·e to offer, ancl wc 'rc-
<Ul
inno-
rnti\·c- bank has figure-cl out how to do the- business loan
here to sol\·c- your problems. If I found a prob lem that
c-xpress product in a cost-efficient way. By bringing them
the SBA couldn't fix, I'd find someone- \,·ho cou ld, e\·en if
in, the- ovc-rall !small busi ness] markrt is highc-r. Wc-'vc-
it was my "so-cal led" compctitors-thr USDA, tlw Louis-
madc- 700 loans with thc-m in one yc,u·.
iana Departm en t o f Economic Deve lopment. Tlw SBA is
not for cvc1yonr; it's about solving problc-ms ancl 0vr1y-
Partners: What 11·ere .IJOlll" stmtegies.f<Jr i11ffeas i11g
one worki ng togC'lhc-r to gC'l the business what ii ,weds. l
th e small business /e11cli11g mlzmzec'
don't cru·c wh o docs it, IC'l'sjust make it happc-n 1
Cornelius: I rea lized that small businesses know what
they do wc-11 , and they do it well! But thc-y don't have th e
Partners: \Vil er<' caII tmclilio11a/ .fi1Za11cial i11stit11-
business acumc-n to be ab le to get cap ital. So rather th ru1
li o ns hat'e the I/lost i111pact
011
i11creasi11 g s111a//
concen trating on teaching th e banks how to do small-
busilless /e11cli11g?
business lencl ing, I focused on educating businesses
Cornelius: If this community cru1 recognize that the lru·-
about how to gC'l more capital, how to be pre-pare-cl to go
gest number of growing businesses across the counlly
to the- bank fo r a loru1.
ru·c- womc-n- ancl mino1ity-owned businesses, that 's whc-rcthe money is ru1d th ey need to get to it 1 It's that simp le.
Partners: We IICll'C' had 1:2 sma ll b11si11ess de1 ,elop111e11/
Thc-y're missing opport uni ti es to make money. We need
ce11/ers stateu•ide. f Comelius interrupts here lo count
to roll up our slc-e\·es, get over it ,mcl gc-t into it-make
l .J, if you i11clucle th e i11tematio11al tmde decelop-
some monc-y 1
m en/ cell/er./ So zchat's clifferent 11011·?
Cornelius: The SBDC's <U"<=' funded by the SBA, so I set
Partners: What Ji1 tw -e tre11cls clo you .foresee?
forth cxpC'clal ions for a certain qualit y of sc-rvicc-. I
Cornelius: I bC'licvc it's an exciting ti me- fo r us. Peop le-
change d thC' eva luation process---instc-ad of look ing at
as k me where I get my c-nergy from and it's because or
what the market is, how many businessc-s do WC' have to
this exc itcmC'nt. There's a migration of peop le to the
reach, say !500 or so, I took a look at what thr m ·rrall
South, ru1d pNhaps for the rust time in Louisiana history
sma ll businc-ss market was and set a goa l or se1Ying
I see the gon·rnor, the maym-s ru1cl senators all working
10 percent of that mru·ket, and of the- 10 percPnl, one-
together on econom ic devdopment. Seeing sPnators of
third o f those businesses will be minority busi1wsses. I
diffc-rent partic-s working together, this is whPrP I gel my
put a spc-cial c- mphasis on increas ing o ur nu m[)('rS in
cxeitc-rncnt , my aclrcnalinc- 1 I don't th in k that wc,,11 recog-
rural communit ic-s. Wc-'vc- increased our impact on rural
nize Louisiana two or I hrC'C' ycru-s from now.
♦
commu nities by 200 percent.
Partners: So l'l'e heard about many of the appmaches
you '1•e take11 to get your team ll'here ./JOU a re. Let 111e
sum ma l"ize a f ell': you '1 1e stepped out of th e 1I'rt.lJ so
that your st a.ff" can clo their jobs, you '1,e i 11creasecl
outreach into th e busi11ess aml bc111ki11g co11111w 11ity,
FEDERAL
RESERVE
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Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
Eugene Conwlius IH'eamP till' District Director fort he Louisiana Office of thr t ·.s. Small Business Administration ( SHA) in
April :200~. As district dirrctor, Corne lius is responsihlP for
t lw administration and implPmentation of the AgPncy's \·arious lending, eontracling, and technical assis1a.11n' prognu11s
in suppo 11 of small husi1wss throughout thr stale of Louisi,ma.
l ntcniew w,L'i cond ucted by Na.11cy Montoya, rrgional comm unity den•lopnwnt manager in th e Atlanta F'rcl"s 1Pw Orlpans
branch.
eleven
Bankruptcy Reform Legislation
TITLE
BUSINEs~~RAL AN
ubtitle A--0
tlP'rcy p
eneraJ Bu8 .
Pr
llless
1-REFORAf
Ovisions
)D
LEGISLATION
nde~ITION.-:--Section lOl
"(48A) ~ ~ ' : after Pa,:~ ~tie 11, V
ecu,-;ties
_es _self regu.JaJ (48) the 1
ange Co~'!tion registe,.;J' o~aniz,,
ge_ Act of 1~14n under sectio With ti,
)\>Ith the Se
or a Dati
n 15A
CUrities
onaJ secunt;
e Securities
!"change e,
-~ection 36i(h1ct of-193~
ns 224 303 of title l
the foiJo~and 311,
(a), of·
!Dent or co t ·
Uriti
n tnuation
. es self re l
tion's regu.Jatogu atQ.
nt or "_ry po,.
Exe'::!!
credi tors. Any debt in excess of the amou nt collected
frnm asset liquidatio n is then forgiven. Chapter 13 filings
allow debtors lo repay specified debts over a threeyear period, and forgive any debts not included in the
repayment plan.
Under current stan dards most individuals opt to fil e
under Chapter 7. According to U.S. Bankruptcy Statistics 1.1 million filed for Chapter 7 relief in 2004, while
nearly 450,000 filed for reli ef under Chapter 13.
Qualifying for bankruptcy protection
The new guidelines include a "means test" to determine if debtors with a nn ual income above the state
median income level qualify for protection under Chap-
DESIGNED TO CURB ABUSES OF
ter 7. Debtors who can pay unsecured creditors, such as
credit card companies, at least $6,000 ($100 per month)
THE CURRENT U.S. BANKRUPTCY
over a five-year period , provided that a moun t is s ufficient to pay 25 percent of the outstanding debt, will be
CODE, THE BANKRUPTCY ABUSE
redirected to a Chapter 13 repayment plan.
PREVENTION AND CONSUMER
($ 166.66 per month) over a five-year period are assumed
Debtors capable of paying creditors more than $10,000
to be abusing the system and will automatically be denied
PROTECTION ACT OF 2005 (THE
Chapter 7 relief.
ACT) ESTABLISHES A NEEDS-
income level are exempt from the "means test" and will
Debtors whose income is below the state median
BASED SYSTEM OF QUALIFYING
FOR PROTECTION UNDER THE LAW.
automatically qualify for Chapter 7 protection. These
debtors, however, can still be redirected to a Chapter 13
repayment p lan if they are able to pay a minimum of 25
percent of their outstanding unsecured debt over a threeyear period, as opposed to the fi ve-year period specified
for other filers.
The Act continues to provide protection for indivi-
The Act was signed by Presid ent Bush in April 2005,
d uals who face extenuati ng circumstances such as a
and most of its provis ions become effective in October of
serious med ical con dition or other hardships. These
this year.
cases, however, must be supported by documentation
Currently individuals file for either Chapter 7 liquida-
detailing expenses or deductions fro m income.
tion or Chapter 13 reorganization bankrup tcy relief.
Chapter 7, the most common bankruptcy filing, allows
Income and expense calculation
debtors a fresh stmt by requiring them to relinquish all
The new law includes an interesting twist: calcula-
of their nonexempt assets, which are liquidated to pay
tions of income, expenses, and disposable income used
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VOLUME
15,
NUMBER
2
to determine a debtor's ability to repay and the rate of
repaynwnt for bankruptcy !ilings will no longer be based
Homestead Exemptions
The Act significantly curbs abuses that occur when
on actual income and eiq)enses, but rather on speci fi ed
debtors attempt to shelter equity in real estal e asse ts
calculat ions and Internal Revenue Se1vice (IHS) guide-
from cred itors by establishing residency in a state with
lines for reasonable living expenses. When calcu lating a
generous or unl imit ed homestead exemptions. Wh il e
debtor's income to delem1ine his or her abilit y to repay,
Congress did not rxpliciUy pre-empt state law with regard
the court will use th e average income for I he six months
l o homestead and oth er state exemptions, il did impose
precrdi ng thr filing of thr ease instead of followin g the
restrictio ns on a drbtor's ability to relocate assrts to
fom1er guidelines, which were based on CLUTent monthly
states such as Flo1ida, Iowa, Kansas, Souti1 Dakota, and
income. Thr new method of calculation could pose prob-
Texas that ha\·e w1limited homestead protections.
!ems for recently unemp loyed debtors or those whose
Cwwntly, unlimited stale homestead exemptions are
ava ilable to th e debtor 180 clays after establ ishing res i-
expenses are higher than th e IRS norm .
dency in a sl ate. Under the new guidelines, if I he dC'bl or
Dischargeable debts
files for bankruptcy with in t wo years of moving to
The Act wi ll significantly reduce the cloll,u· ammU1t of
ai1other state, he will have to claim tlie homestPad exPmp-
pre-filing aceu mulatecl "goods or sovices not reasonab ly
tion of his previous state of residency. Once residency
necessary for the suppoti or maintenance o ft I1C' clrbt or
has been Pslablishecl for a minimwn oft wo yeai-s, he can
or the debtor's dependents" that can be clischargecl. In
claim onl y .· 1:25,000 of the state's ma,xirnurn honwstead
addition it ~,ill increase U1C' time pe1iocl over which these
allowai1ce. AJter three yeai-s of residency the debtor is
luxury debts can be accumulated , thus all owing cred-
eligible for the state' full exemption.
it ors l o re covN larger amounts of outs tandin g debt.
For exam ple, suppose John Doc relocate s fro m
Creel it ea.rel debt in excess of $500 accu mulated within
Georgia to F'lorida and purchases a $300,000 home.
90 clays of filing will not be discharged. Currently the law
Within a yem of moving, John falls upon hai·cl limps and
states that amounts in excess of . 1,:2:25 accumulated
must file for bankruptcy protection. BPcausP John has
GO clays plior to the nling cannot be dischru-gc•cl. The clis-
li vPcl in Florid a for less than two years, he must use
chargeable limit for cash aclvai1ces accumu lated w ithin
Georgia's homestead exe mpt ion allowanc<' of $::i,000.
70 clays ( cuITently 60 clays) of filing will be reduced from
John would havp been eligible for a $12::i,000 Pxemption
$1,:2:25 to $7!:i0. F'urthermore the cash advanc·e limita-
if he had filed for protrction two yeai·s or more after
tions apply to any items purchased, not just luxury goocls.
moving to Flo1ida. F'u11her, if Jolu1 had filed for protee-
Counseling
able to elaim the unlimited exemption alJowed in Florida
t.i on after more than three years, he would have been
The new law rPquires that debtors recei\·e c-rc•clit
COLUl-
srling prior to filing for bankruptcy, ancl ii mandates
or the full \·aluP of his home.
While somp slates offer w11imited homestead exPmp-
financia l managc'mPnt training prior to clisc-llarges for
ti ons, others offPr l imited exemptions or none at all.
bankru pt cy. This credit counseling can bP proviclNI by
HomestPacl Pxemption limitati ons for Sixth Dist riet
a nonprofit budget and credit COLU1Seling agpncy apprm·ed
States ai·e as follows: $5,000 for Georgia, Alabama, and
by the l l. S. tnistee or bai1krnptcy administrator as pub-
Tennessee; $1::i,000 for Louisiai1a; $75,000 for Mississippi ;
lishccl by the clerk of the court. ApprovPcl agencies
and LUilimit ecl exemption for Flmida. Alabai1ia, Georgia,
are req uired to provide these services w ithout regard
and Mississippi allow exempt ions to be doubled for cou-
to the clebtor's ability to pay emo llnwnt fePs. The cou 1i
ples !Uingjointly. Tenn essee allows a $7,500 exemption
makes except ions when it determines that adequate
for joint filPrs. Louisiana does not increase homestPacl
counse ling se1Yices are not a\·ailablC', as well as for
exPmption for joint filers.
debtors who are incapacitated , disabled , or on acti\·e
military duty in a combat zone.
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Federal Reserve Bank of St. Louis
BANK
In liPu of state exemption s, debtors may have the
option of c laiming the federal homestead Pxemption
OF ATLANTA
thirteen
of $18,450, but state law must authorize their right
individual that has a stake in the bankruptcy case may
to do so .
fi le a plan up to the 300-day deadline. The previous time
An additional limitation placed on homestead exemp-
frames for these events were 100 and 160 days, respec-
ti ons is an absolute $ 125, 000 maxi mum imposed on
lively. Current ly Chapter 11 plans can drag on for years
debtors who have been convicted of certain fraudulent
because o f repeated fi lings for extensio ns. Extensions
crimes or criminal acts that caused serious inj ury or death.
are significantly resb.i cted under the new law.
Un like other provisions of the law that go into effect
The new regulato ry and reporting requirements for
in October, the homestead exemption limitation rules
small businesses are more onerous than in the past to
were declared effective upon enactment of the law on
ensure that reorganization plans are filed in a timely
April 20, 2005.
manner and that the businesses arc perfonning according to the plans. If, upon inspection of the business and
Bankruptcy discharges
review of re ports, the U.S. Trustee assigned to a parti-
To cut down on the number of serial filings, the Act
cular case determines that the reorganization will not
lengthens the mnmmt of time stipulated between Chap-
work, the b usiness can be directed more quickly into
ter 7 filings from six years to eight years. Chapter 13 dis-
liquidatio n to allow more timely repayment of creditors.
chm·ges are not allowed within two years of a previous
Chapter 13 filing or within fow- yea1,; of a Chapter 7, 11,
or 12 filing.
Other significant provisions
The law will also requ ire changes to Regulation Z,
Truth in Lending Act, to be in1plemented by the Bom·d of
Small business provisions
Governors. The a111endments will focus on minimum pay-
The new law has specific requirements and reporting
mc nt di sclosures and informa tion ; requirements for
guidelines for small business debtm,; who apply for Chap-
high loan-to-value credit extensions using the home as
ter 11 reorganization. A small business debtor is defined
collateral; a11d disclos ures for special rates, Internet-
as a business (other than owning or operating real estate)
based credit card soli citations, a nd late paym ent dead-
having less than $2 million in debt. Some estimates indi-
lines a11d penalties.
cate that this defin ition covers over 80 percent of all
Chap te r 11 filings. Fi ling status as a s ma ll business,
which was previously optional, now appea1-s ma11datory
to meet eligibility guidelines.
Another new requirement states that within seven days
Conclusion
Revisions Lo the U. S. Ba11kruptcy Code by the 2005
Act accomplis h the goal of curbing abuses by limiting
the possibi lities for manipulating the system to protect
of filing for the order of relief, the small business debtor
large amou nts of a massed wealth whil e charging off
must sub mit a recent balance sheet, statement of opera-
carelessly accrued debt. The Act also protects indivi-
tions, records of cash-fl ow, and federal income tax inJor-
duals who, based on fin ancial or other hards hi ps, tru ly
mation. On a periodic basis small business debtors must
qualify for and need ba11kruptcy protection.
a lso file reports on profitability, projections of future
Howeve r, while the new legislation provides cred-
cash receipts and disbw-sements, compmisons of actual
itors with in creased ability to collect on debt obliga-
receipts and disbursements to earli e r projections,
tions owed by consumers, it does nothing to constrain
payment of taxes, and a statement of compliance with
a buses by creditors who use mass marketing and lax
bankruptcy rules, tax, and other governmental fili ng
credit underwriting to lure consumers furth er and
obligatio ns. Reporting requirements wil l not be man-
further into debt without considerati on for the likely
datory until official form s for such information have
negative consequences.
♦
been developed.
Under the new law the small business debtor has 180
T his article w as wri tte n by Lisa Easter wood, fi nan cial analyst
in t he Supe1vision and Regulation di vi sion at the Atlanta Feel.
days Lo file a reorganizatio n plan. Afte r that time any
fou rt een
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VOLUME
1 5,
NUMBER
2
Sustainability and Scale:
New Buzzwords or Tools for Survival?
CURRENT ECONOMIC AND POLITICAL CONDITIONS CALL FOR NEW WAYS OF THINKING
ABOUT COMMUNITY DEVELOPMENT. "SUSTAINABILITY" AND "SCALE" ARE CRUCIAL CONCEPTS
IN TODAY'S TIGHT FUNDING ENVIRONMENT.
ment is no different, and service providers have always
grappled to make the most of their budgets.
But now more than ever, organizations are being forced
to look at additional ways to cut expenses, increase producti\ity, or both in response to funders' expectations.
Funding is becoming so scarce and difficult to obtain
t hat many commu nit y organizations may face demise
unless they imp lement major changes.
Some might argue that increased government spending is the solutio n to sustaining community development. But it's unrealistic to expect government funding
to serve as a cure-all, given cunent policies and competing priorities.
o r can t he collective resources of
fin ancial institu tion s or ph ilanthropy keep pace with
growing deman ds.
Th e bottom line is that many commw1ity developmen t
organi zations w ill need to rethink long-range plans as
they eval uat e progran1 costs and assess thei r effective-
As needs outstrip available resources, market forees
drive stakeholders to cut costs through stru ctura l or
ness. MaxirnLm1 internal effi ciency ,vi.II becomC' increasingly tJ1e starting point in seeking and justifying resources.
fw1ctional combinations and greater standarclization in
order to grow-or merely to su rvive. The commu nity
development industry stands at an important crossroads,
Leveraging resources through alliances
Besides stri ving to max imi ze efficiency internal ly,
and new approaches are essential for its con tinuing via-
organizati ons can increase efficiency through leveraging
bility. "Sustainability" and "scale" arc indeed more than
externally. For example, two organ izations prmiding
just new buzzwords.
cWTerent yet complementary services can combine forces
in sening the same community through an alliance or
Funding pressures call for greater efficiency
In a world of limited resources, all industrie e;,_rperi-
merger. Combining two smaller organizations with the
same mission is another form of external leverage.
ence pressures lo increase productivity through gains in
Leveraging can also be achieved through joint ventures
efficiency to remain competitive. Com1mmity develop-
or vaiious contract a.ITangements.
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fifteen
Granted, recommending leverage through alliances is
easier said than clon e. I ssues often ari se concerning
through standardization, so that an increase in production volume r0du ces the cost of each item produced.
l eadership , control , and in ev itable st a ffin g cuts in a
Th e push for great er scale comes largely from the
merged organization. A success ful alliance requires that
marketplace, which seeks consistent and predictab le
both groups Lmderstand and recognize Lhc quantifiable
standards Lo mitigate risk. Standardization creates larger
val ue o r a combination-w ithout ever losing sight of
markets by increasing participation Uu·ough gr 0atcr uncler-
c learly defined goals about what's b0st for everyone,
st,rnding, which in tmn fosters higher conlid0nce.
especially the conummity being serv0cl .
Clear communication that builds trust among all parties
Individual organizations can achieve greater efliciencies of scale in small ways such as taking advantage of
is vital, especially among the boards of dir ectors. In addi-
external se1vice provi ders. For example, a small or nlid-
tion to evaluating the structw-al aspects o f a merger, risks
sizcd nonpro fit probably can't process its mvn payroll as
should be ell.rplorecl thoroughly, includ ing legal matters.
effi ci ently as an extern al payroll forn that has ach ieved
Third par ty professionals can be 0ngagcd to provide
cconomi0s or scale tlu-ough volume.
guidan ce any step al ong the way.
Achievi ng greater scal e w ill La.kc signifi cant time ,
especially sin ce so many nonprofits arc small shops.
Improving marketplace sustainability
In addition to looking at the sustainabili ty of individual
organizations, conrn1unity deve lopment must also stlive
Som0 organizati ons still lack I nternet acc0ss and even
computers. But the wheels have been set in motion by
market force's Lhat crave efficiency.
for sustainability through efii cienl markets. For exan1ple,
comm wlily development efforts that attract market-rate
inv0stment stand a greater chance or creating momen-
Reality check
Th e inherent issue with the concepts of sustainability
tum to benefit the entire commwlily over a shmier pe1iod
,md scale is that one size does not li t a.II.
or time. This success reduces Lhe need for add itional
definiti on are not designed to make money provid ing
subsid ies, allowing funds to now into other proj ects.
sc1v ices that the for-profit sector c;:mnot o ffer. Nor will
Se1-ving more peopl e with fewer resource's furt her
certain organizations ever be able to merge if geograpllic
enhances effi ciency.
In considering sustainability at the level of individuals
onprolits by
constraints or their specialty se1vices do not lend themselves to linkage with other groups. In these cases, th e
and fanlilies, it has become apparent that creating afford-
cost of provid ing services may be cl0emed preferable to
able homeowi1ership must be complement ed by access
incurring societal cost if the se1vi ces a.re not provided.
lo mainstream banking products and servi ces. Co ntin-
So discussions must remain real isti c and keep sight of
uing reliance on expensive, fringe se1vic0 providers drains
an organizati on's context.
prec ious wealth-buil ding op port unity and t hrcatens per-
Another realit y touchstone is recognizing that changes
sonal fi nancial sustainability. At al l levels of conumulity
oft en take sign i li ca.nt time. While an idea.I merger co uld
bu.i.Jcl.ing, best practices maximize use of Lim ilcd resow-ces.
occur in a matter of weeks or months, so me processes
can Lake many yea.rs or even decades. Again , conti nued
Encouraging more standardization
What do we mean by the term "attain ing gr eater scale"
viability shou ld be stressed as the rationale for advan cin g these concepts.
in conumulity development? Although this broad concept
can be clefmed in many ways depending on Lhe conlell.'t,
econom ics of scale basical ly result in lower costs per
The role of the Federal Reserve
The Fed's Community Affairs fun ctio n promotes
unit, whether one is consicle1ing loan transactions, invest-
effective programs and fair lending to achieve greater
ments, or numbers of customers s01ved. Efliciencies of
econonlic stability in low- and moderate-income conm1u-
scale are possible when fixed costs can be contained
nities, largely tlu-ough facilitating pa.ttnerships, providing
Digitized sixteen
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VO L UME
15,
NUMBER
2
informal ion, and offering technical assistance. II is not
fo r enhancing programs and organizational efficiency to
the role of the Fed to advocate mergers or establish
promote stronger cornrnLulities.
♦
induslly standards.
Neverlheless the Federal Reserve Bank of Atlanta's
T h is ai1 ic lC' was w r i t Len by Wayn e Smi t h, Comm u n ity Affa irs
D irector al th e At lan ta F'cd.
regional managers stand ready to discuss opportunities
An Informed Discussion: Achieving Sustainability,
Scale, and Impact in Community Development Finance
representatives and other funders, as well as those
In April 2005, the Federal Reserve System and the
Aspen Institute's Economic Opportunities Program
involved in related public policy areas can share
co-sponsored the first of seven conferences to be held at
ideas about the future of the CDFl/community
development industry;
various Reserve Banks and the Federal Reserve Board of
• Encouraging future dialogue and action on the
Governors over the next two years.
The conference series is based on a paper by the Aspen
industry and industry practices, and developing
Institute's Economic Opportunities Program. Published
techniques to measure the impact of new or modifled organizational and industry practices.
by the Chicago Fed's Consumer and Community Affairs
The record of the conference can be found as a link
division in December 2004 in its periodical, Profitwise
News and Views,' "New Pathways to Scale for Commu-
from the Federal Reserve Bank of Chicago's public web-
nity Development Finance" ' summarizes 10 case studies,
site 3 or directly from http://innovationlabs.corn/aspen/
prirnruily private sector examples, of successful attempts
Please refer to tllis resource as well as "New Pathways
to broaden the impact and market reach of an assort-
to Scale for Commwlity Development Finance" for com-
ment of products, services, and orgatlizations.
prehensive infom1ation on the subject of sustainability
The conference's goals included the following:
and scale.
♦
• Introduction of a new framework for scale and
sustainability for the community development
' http://www.chicagofed.org/community_clevelopmenl/2004_
profitwise_news_ancl_views.cfm
finru1ce field;
• Exploration of new business models and practices
2
By Gregory A. Ratliff and Kirsten S. Moy, witl1 Laura Casotti,
Steve Davidson, Catltie Mahon, and Freel Mendez. Funded by
The F.B. Heron Foundation, The Fannie Mae Foundation,
and tl1e John D. and Catl1erine T MacA.tthur Foundation.
3
http://www.chicagofed.org/comrnunity_developrnenU
inclex.cfrn
with potential for promoting scale and sustainability
in the field;
• Providing a forum in which bankers, community
econonlic development professionals, foundation
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seve nteen
Protecting Our Military
from Predatory Lenders
THE MEN AND WOMEN WHO VOLUNTEER TO SERVE IN THE MILITARY, MANY
OF WHOM ENLIST STRAIGHT OUT OF HIGH SCHOOL, OFTEN HAVE LIMITED
EXPERIENCE IN FINANCIAL MATTERS.
As they embark on a tour in the mi li tary, they may
is purchase his dream car. Withi n a few months h e
incur a number of expenses th ey have not had to bud-
acquires tlu·ee credit cards and uses them to buy a stereo
get fo r in the past. The average private or seaman
and an assortment of other electronic luxrnies.
already lives on a re latively low income, and he or she
When Jim realizes he has other expenses he didn't
typi cally cannot afford the burden of unreaso nably
anti cipate, he goes to the local bank for a loan, but he
h igh interest rates.
soon learns he has too much debt to qualify. As a last
Jim, w ho just graduated from high school, is excited
resort he goes to a payday lender that has been sending
about his new career in the mHitary. He can't believe he
hjm solici tations in the mail. He bon-owsjust enough to
has a j ob th at provi des room , board , food , and work
get by, but he finds he doesn't have money to pay off the
clothes in adclition to a paycheck. The first thing he does
eighteen
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debt at the encl of the month. So he refinances thjs debt
over and over again to k eep CLm·ent.
Jim is a fi cti onal character, but his story is typi cal
for a large number of our service members throughout
the world.
According to the Fleet Reserve Association (FRA), a
congressi onally chartered nonpro fit organizati on
repres enting the in terests o f lJ.S. Navy,
Marine Corps, and Coast Guard p ersonnel
with regard to compensation, health car e,
benefits, and quali ty-of-life programs, the
probl em of indebtedness can affect service
members' ability to function effectively.
"This probl em is not just a personnel issue,
but it's viewed as a readiness challenge. If service members fall into debt, they run the risk of
being unable to deploy. They can lose secm·ity
clearances and, more in1portantly, wi ll not be able
to effectively focus on accomplishing their mission if
consm11ecl with concerns about indebtedness," says an
FRA r epresentative.
VOLUME
15,
NUMBER
2
Protective legislation
new recruils and other se,vice members who find them-
A bill has been proposed in Congress to protect om ser-
selves in finan cial trouble. T he Department of Defense
vi ce members and U1eir dependents against the w,ethical
also collaborated with the FDIC to offer frncrncial educa-
practices of predatory lending. T he Se1vicemembe rs
tion workshops at more than 3,000 milita,y install ations
Anti-Predatory Lending Protect ion Act wo uld pro hibit
around the world. The FDIC''s Money Smmt !i na11cial
creditors from imposing an annual percentage rate (APR)
educati on progra111 cwTicuJum consists of 10 easy-to-teach
greater tha11 36 percent on consumer credit extended to
modules on basic frnancial topics such as choosing and
a service member or service member's dependent. (The
main tain ing a checkin g account, budgeting basics, th e
average APR for a payday loan is 300 percent.)
importance of savi ng, and how to bu il d and main tain
The proposed law ma11dates loa11 disclosm es, inclucling a statement of th e APR for extension of credit, and a
elem· description or the payment ob ligations.
The legislation would also protect se1vi ce mem bers
who m·e fo rced to continue taking out loa11s with higher
good credit.
Whil e these frna11c ial ed ucation seminm-s m·e helping
ma11y or our se1vice members make wise financial decisions, adclit ional measures are clearly needed to dea l
with the unethical business or preda to,y lend ing.
and higher APRs th at make it impossible to repay th e
original loan. Stipul ations prohibit a creditor from au tomatically r ene win g, re fin ancing, or cons oli dati ng
credit w ith the proceeds of othe r credi t extended by
An important debate
Recognition of thi s prob lem by th e Department o r
Defense is a positive step, as is the effort to enact legis-
th e same cred itor w i tho ut maki ng a new loan doc u-
lation to address many of these issues. ll owever, ques-
ment in cl uding th e requ ired loan di sclosures, to be
ti ons have arisen concerni ng the imp lemen tation of a
signed by th e service member.
law that req uires separate interest rates, clisclosm es, cU1cl
The Servicemember-s Anti-Predatory Lending Protec-
terms for the militm-y. If we view om milit ary personnel
tion Ac t would preempt any state law, rule, or regulation,
as a microcosm of the general public, perhaps we really
including any stale usmy law, inconsistent with the legis-
need broader legislation that protecls th e average cit izen
lalion, unless state regulations provided additional pro-
as well as mil itary servi ce members. Ongoing debate
tection. C1iminal penalties me prescribed for violat ions.
about this issue ultim ately helps build national momen-
The ll onorable Sam Graves or Missouri, who intro-
tlml against predatory lencl ing practices. ♦
clucecl the bill (HR 97) in the U.S. Ilouse of Representatives, pointed to rece nt cr edit industry studi es wh ich
foun d that 26 percent of militmy households have clon e
Tb is art iclr' was written by M ich,wl Mi ln er, regiona l comm uni ty devr' lop rn en t clircc-tor al the Atlanta Peel 's 13i rn 1in gham
Branch.
business with high-interest instan t lenders.
"We can do better for our troops. These busin esses
are gem·ecl towm-cl and are tm·geling our soldiers. Om
men and women in w1ifom1 should not be treated like a
niche mm·ket; we depend on them for om freedom a11cl
owe them our gratitude, " Graves says.
The bill, which was introduced in Ja11umy of 2005, has
been referred to the Committee on Veterans Affair-s, a11d,
as of July 2005, it remained in committee.
Financial education is necessary but not sufficient
A number of banks and credit uni ons have partnered
with mi litmy bases to provide financial ed ucati on fo r
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OF
ATLANTA
nin eteen
Spotlight on the District
!low do rural southern com munit ies achieve greater
regions, w ith out regard to traditi onal po liti c-al bou nd-
prospcri ly'I This question set the agenda al th e Southern
arics. The stu dy advi ses combining resou rces regionally
Growth Poli cies Board's an nual "Summ it on the Rural
to scn'C the aggregate community more dTC'c-tivcly. In
South" held in Poi nt Clear, AJabcmia, in .June 200!:i.
most cases, regions in cl ude at least one metropo li tan
This year's nwetin g feahffed prcscn tat ions of rural sueCTSS
stories, innovative approaches to rural development,
area to sc 1vc as a central hub. Experts argue that rural
com m uni I ics must band together to achieve th e cr itical
and academic· stu dies. It was chaired by I he l lonorable
mass csscnl ial for competitiveness in rec ruiting industry
Bob Ri ley, governor of Alabama.
and other poknlial economic investnwn ls.
The Board's an nual report, "The New Architecture of
Rural ProspNity," synthesize d input from ovn 2,200
Entrepreneurship is vital to a stable community
southe rn ers through focus groups, co mmunit y forums,
Though most rural conm1w1ities make business recruit-
and su 1veys. Five basic prerequ isites enlC'rgcd as cru cial
menl the first p1iority, keynote speaker Mark Drabenstot1,
f"o r the success of southern rmal commu nit ies: 1) strong,
vice president and director of the Federal Reserve Bank
forward- I hi n king leaders hip ; 2) st ral eg ies to mak e
o f Kansas Cit y's Cent er for the Stud y of Rural Ameri ca,
rural areas attracti ve to young peop le; :3) qualit y edu-
believes th at "rural comm unities should pul more cmpha-
cat io n; 4) prese rvati on of a dist inc-I ly ru ral charac ter;
sis on cn treprPn eurship and less on recruiting ind ustry."
and !:i) sl ratcgic investments in infrast r ue-lure.
In fact , he believes rLU·al communities ncC'd to set entrepreneurship as their first p1i01ity and recruitment as their
Recommendations to promote economic growth
The annual report states that economi c- development
la.st. Large businesses can put rural communities at risk
tlu·ough plant closings and extensive layoffs. According
must be approached as a set of interrelated act ivities
to Drabensl ott , building a conm1unit y w ith a strong base
that c-real C', expand , an d recruit businesses. Con I in uing
of entrepreneurial ta.lent provides a more stab le enviro n-
prospe rit y depends on managing co mmu niti es as in te-
ment and hope for a better futm e.
♦
grated ent erprises. "The work of industri al recruiters
and the ac tivities of capacity builders must be brought
together to operate in harmony. Otherwise-, the recru iters
may be pursuing call centers whilr ol hers try to buil d
capacity for biotechnology firms ," tlw report says.
The repo1i further recommends designing and manag-
Thi s artic le was wriltm by Michael Mi lnN, reg ional c-o nrnrnnity dPvPlopnwnt di rec tor al the A tlanta Fed's Birmingham
Branch.
T lw Soullwrn Growth Pol icies Board is a pub li c--pri,·ate partnership dc•dic-ated to strengthening the South's economy and
maximizing its quality of life. For more informal ion visit I heir
websilP al llllp://www.so uthern.org/
ing econom ic- development along the li nes of ec-ononlic
I wen I y
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VOLUME
15,
NUMBER
2
A unique part nership that includes fede ral and local
gove rnm ent, the pri vate sector, faith -based organ-
required lo make monthly deposits. O\·er a t wo-yea r
p eri od c-lient s can save up lo $2 ,000, which will lw
izalions, and soc ial se rv i ce programs is helping the
matched by a maximum of $4,000 in federal and local
working poor in Jackso nville, Flo ri da, move int o the
fund s fo r a total possible savi ngs of $6,000.
econom ic mainstream.
IDA savi ngs accounts target low-income individuals
Combining fundin g from a variet y of so urces, Fresh
and families and may bC' used to purchase' a first homC',
Ministries Individual Development Accoun t (IDA) Part -
pursu e' post-secondary C' clu c-aLion o r j ob training, o r
nC'r Group enab les families to build wealth and strive' for
capit alize th e start-up or expan sion of a smal l business.
economi c- independence. The group received a $1 mi llion
The IDA program also coordinates wi th thC' Nm1heast
grant from the fC'ciC'ral govenu11ent along with matching
Florid a Prosperity Campaign and ot her com munit y
fw1ds from the City of Jacksonville's Comm unity DC'vC' I-
organi zati ons as well as the Atlanta Fed's .Jac ksonvi lle•
opmC'n t Block Grant Program, Bank of Ameri ca, Com-
bran ch. T hC' Campaign C'ncourages participants l o usC'
munily Partnershi p for Protection of Ch ildren, and a
the EarnC'd Income Tax Creclil (EITC) as a tool l o accu-
p1ivat C' fow1d at ion.
mulalC' savi ngs toward t hC' I DA goal.
Fres h MinistriC's is a faith -basC'd organiza ti on that
servC's the urban core neighborhoods of Jacksonvil le'. Its
IDA Partner Group collaborates with nC'ighborhoocl-
Biggest
I e 1g for p o· ·ams ·s
k .
MarkC'ling their se1Y ices lo eligible' families has bC'C'n
based nonprofit organizations, p1ivatC' SC'Cl or alTordable
th e biggC'st chall enge for both the I DA ancl El TC pro-
housing providers, and local govern ment agC'ncies, inducl-
grams. Fo r many the program represC'nts lhC'ir first
ing lhC' ,Jacksonville I lousing Authority, VC'stcor, FamiliC's
opportunity to budgC't for and maintain rC'guku- savings,
F'irst, .Jac ksonvi lle' Urban League, Community Pa11nC'r-
and il sounds "loo good to be true. "
ship for t he ProtC'ct ion o f Childre n, Fami ly CounsC' ling
While nonC' of the pa.t1 icipants havC' c-ompletecl th C' pro-
Se1vicC's, I labijax (1labitat for Humanity of Jacksonville),
gram thus far, several arC' nearing thC'ir goals. SC'vC'nt y
Operation New ll ope, and Conummily Connecti ons.
percent arC' saving for th C' clownpaymC'nt on their first
hom es. OnC' participant , Sheila Jenkins, a formC'rly
f" a
·a1 :du .af n
co
n .n
0
CC'ntral to a succ-C'ss ful IDA program is a found ation of
personal fin anc ial C'ducation. Pa.rlicipm1ts co mpiC' tC' a
linm1c-ial educati on course and estab lish batik accounts
providC'd by SunTru st Bank and Wa chovia. ThC'y arC'
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homeiC'SS moth er o f live, used a pmiion of lwr Em-nC'cl
Income' Tax Credit to staJi her IDA savings account , m1el
she is now saving to buy a home.
♦
Th is artic lC' was writl C' n by .Janel Harner, rC'giona l cornrnuni l .V
deve loprnC' nl managrr al I hC' Al l,ml a Fed 's .Jackso1will e bnmch.
twenty - one
FEDE R A L RESE RV E B ANK
OF ATLAN T A
COMMUN IT Y AFFA I R S DE P A RT MENT
1000 P E ACHTREE ST R EET , N . E .
ATLANT A , GEORG I A 303 0 9 - 44 7 0
CHAN G E SE RVICE RE QUES TED
STAFF
VICE PRESIDENT
StC'VC' FolC'y
COMMUNITY AFFAIRS OFFICER
Juan C. Sanc-hC'z
COMMUNITY AFFAIRS DIRECTOR
Waynr Smi th
EDITOR
.Jrnnif'C'r Cr irr
PRODUCTION MANAGER
llarriC' ll c Grissom
STAFF WRITERS
.]C'ssic-a Lr VC'('n Fa rr
.lancl I la nwr
Mike Miln rr
Nancy Montoya
CONTRIBUTING WRITER
Lisa E:asl cr woocl
DESIGNERS
PrtN l l amill on
Odie Swanrgan
FrC'e su bsc ription and addi ti onal
copiC'S arr a\'ai lab le upon requ est
by mai l al lhC' Community Affairs
Drparl rn C' nl add ress abm·r , or
e-mail us al Pr1r/11 e1-s@a tl..frb.01:(J,
or ca ll 404 /488-7287; FAX
404/488-7:342. The vi ews
exp ressed an' not necessar ily
I hose o f' I he Federal Reserve
Bank of' Atlan ta or the Federa l
RC'SC' tYC' SySIC'm. 1\rlaterial may bC'
rrpri ntl' cl or abstracted prmicl C'cl
that Part nrrs is credited and
provi cl C' cl w ith a copy of thC'
pub li c-al ion.
www.frbatlanta.org
https://fraser.stlouisfed.org
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PRESORTED
STANDARD
U.S. POSTAGE
PAID
Atlan ta , GA
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