December 22, 2009: Bank CEOs, Tithe Your Bonuses to Jobs Recovery
SAN FRANCISCO—With banks’ bonus pools expected to hit record highs in 2009, the California Reinvestment Coalition delivered letters to CEOs of the four biggest banks calling on them to tithe 10 percent of their executive compensation—about $19 million—to go toward a “Main Street Stimulus” for jobs recovery.The four biggest banks are Citi, Wells Fargo, Bank of America and JPMorgan Chase, which together hold 60 percent of deposits in California.
“Banks were bailed out by taxpayers on the premise that they would lend and support economic recovery, yet today the credit crunch for small businesses is worse than ever,” said Alan Fisher, CRC executive director. “This holiday season, since the public had to give banks such a generous gift, we propose that top bank executives give back from their bloated bonuses to help create the jobs our economy desperately needs.”
Half of all California’s workers are employed by small businesses, which represent more than 80 percent of the state’s private sector companies, according to the Small Business Administration. Since the mid-1990s, small businesses have typically created between 60 to 80 percent of new jobs and must play a major role in any economic recovery.
While the state’s unemployment rate fell slightly in November, it is still at a whopping 12.3 percent. California lost 800,000 jobs from July 2008 to July 2009, according to the Department of Labor. In the face of the jobs crisis, the state’s nonprofit lending sector is telling government agencies and financial institutions that they have “shovel-ready” solutions to stem the bleeding by supporting self-employment in struggling neighborhoods.
California’s nonprofit community lenders and technical assistance providers currently have the capacity to lend between $500 million to $1 billion over the next two to three years. They estimate that this amount of investment could save and create up to 200,000 jobs at a cost of about $4,000 per two jobs created—compared to the $35,000 that federal programs typically cost per job.
Twenty-six organizations are presenting the proposal for a Main Street Stimulus to Congress and the Administration this week. Together, these groups represent nearly two-thirds of the nonprofit lending sector in California, responsible for 75 percent of the small business lending in California.
“The banks are not going to increase their small business lending before 2011, so in the meantime, we are saying to the government, move some of the leftover TARP funds to nonprofits who are shovel-ready for getting this money to small businesses in communities that need them,” said Roberto Barragan, president of Valley Economic Development Center in Los Angeles.
In their letter to Congress, the nonprofit lenders propose several key changes to Small Business Administration rules to allow nonprofit lenders to offer the same loans that financial institutions offer under the SBA’s loan guarantee program; expanding loan sizes under the state SBA Micro-Loan program; and increasing funding to SBA Women’s Business Centers and the CDFI Fund to serve more low to moderate income clients. The types of businesses being served by nonprofit lenders include daycares, food retailers, cleaning services, beauty salons and catering. The majority of them are started by people of color and women turning to self-employment for economic survival.
For more information or to arrange interviews, please contact Tram Nguyen at (415) 864-3980; tnguyen@calreinvest.org.
The California Reinvestment Coalition advocates for the right of low-income communities and communities of color to have fair and equal access to banking and other financial services. CRC has a membership of more than 275 nonprofit organizations and public agencies across the state.
