Bank Enterprise Award Changes to Incentivize Consumer Loans

Expressing concern that lenders participating in the Treasury Department’s Bank Enterprise Awards for distressed community financing are “disproportionately incentivized” to make commercial loans, the Treasury’s Community Development Financial Institutions Fund is tomorrow issuing a revised interim rule creating subcategories for commercial and consumer loans under the BEA program for distressed communities.

“Increases in lending for commercial purposes have consistently been reported at higher levels in BEA program applications than lending to residents of distressed communities, likely due to the larger average size of commercial versus consumer transactions, which makes applicants potentially eligible for larger BEA program awards,” Treasury said.

Treasury is adjusting the program by creating the two subcategories and requiring BEA applicants to aggregate baseline and assessment period amounts within each subcategory. The rule takes effect immediately, and comments on it are due by Oct. 9.


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