Brooklyn's Progress
August/September 2008

BY JILL D’AMICO

While some areas of Brooklyn seem saturated with banks on nearly every corner, the reality is that large swaths of the borough are very much underbanked. The New York State Banking Department, in conjunction with other trade and government organizations, has spent the last ten years fine-tuning a program to help change all that.

Banking Development Districts (BDD) legislation was first signed into law by Governor Pataki and became effective on Jan. 1, 1998 “to encourage the establishment of bank branches in areas with a demonstrated need for banking services,” according to the NYS Banking Department. Through incentives and community effort, banks are able to open in underserved areas, giving the area’s residents and small businesses access to credit, incentive to save and financial education. The access is especially vital towards helping the local small businesses, which in turn encourages revitalization, community investment and job growth.

“There are few more potent signs of economic development in a community than the opening of a new bank branch. The Banking Development District program gives my office a great way to promote community and economic development in underserved areas across the state,” said New York State Comptroller Tom DiNapoli. “Through these BDD designations, we are bringing New Yorkers better access to capital, jobs and opportunity. During these uncertain economic times, it’s more important than ever that New Yorkers have access to the full range of available financial services so they can build and secure wealth for themselves and their families.”

To create the BDD, a bank must partner with local government and demonstrate that a specific area is in need of a bank, or the needs of the community are not currently being met by other financial institutions.

For their investment, banks receive incentives like a highly favorable Community Reinvestment Act consideration, which is the 1977 law that required banks to apply the same lending criteria in all communities, effectively ending redlining. Banks can also work with their local government partners to agree to favorable rates and may receive public deposits from the municipality.

In turn, the NYS Banking Department will connect BDD branches to organizations providing financial education and facilitate contacts with community groups.

The program has grown over time. As recently as 2005, the NYS Banking Department reported that Brooklyn still only had 1.14 branches per 10,000 people. That same year, Enriched BDD’s were created, which make available additional city and state incentives, such as real estate tax abatements and job creation credits for specific areas.

Currently, there are eight BDDs in Brooklyn, including portions of Sunset Park, Bedford-Stuyvesant, Fort Greene, Clinton Hill, Greenpoint, Williamsburg, Windsor Terrace, Borough Park, Kensington, Flatbush, East Flatbush, Prospect Lefferts Gardens, Midwood, East New York, and Red Hook.

Capitol One Bank, formerly North Fork Bank, was approved for a BDD in 2007 for an area that covered parts of Fort Greene, Clinton Hill and Bedford Stuyvesant.

"At Capital One Bank, we give back to our communities in a variety of ways. In serving underbanked neighborhoods, we're able to provide the best banking experience for residents and the many small businesses that make up the community," said David Dineen, New York State leader at Capital One Bank. "Through building this branch on Fulton Street, we're able to provide a full range of Capital One products and services to a community that didn't have prior access to local mainstream banking."

Local leaders are hopeful the program will continue to expand.

“Banks are important to a community, but if you go throughout the area of Bedford Stuyvesant, you will find that many are not strategically located,” said Charlene Phillps, district manager of Brooklyn’s Community Board 3. “The northern side needs more banks and the eastern side needs more banks. People still have to travel to get to one.”