Magazine article American Banker

Broker Uses CRA as a Lure; Her Client Banks Get to Claim Donations

Magazine article American Banker

Broker Uses CRA as a Lure; Her Client Banks Get to Claim Donations

Article excerpt

Muriel Siebert, showing a characteristic flair for innovation, is offering banks and thrifts a way to score points with Community Reinvestment Act examiners while making their own investments.

Ms. Siebert, the former New York State superinntendent of banks and the first woman to join the New York Stock Exchange, has been promoting a program in which her discount brokerage firm gives half of its underwriting commissions from new issues of municipal and corporate securities to charity.

In the past 13 months, the firm has donated about $250,000, said Lynelle Jones, senior vice president in charge of institutional sales at Muriel Siebert & Co.

CRA Credits

In a bid for new business, the brokerage is now telling banks and thrifts that donations made to certain charities designated by them can be used to earn CRA credits.

The first institutions to take advantage of the program were two suburban New York City thrifts -- Fidelity New York ibn Garden City, and Riverhead Savings Bank in White Plains, N.Y.

They recently bought $8 million of mortgage securities issued by the Resolution Trust Corp. from Siebert & Co. As a result, the broker donated $15,000 to Neighborhood Housing Services of New York City to renovate a six-family apartment house in a poor Brooklyn neighborhood. The group has been a frequent benefactor of CRA donations.

Neither Ms. Siebert nor the banks she sells to pretend to purely philanthropic motives. "This program also works to our benefit," Ms. Jones said. "We are a new player so it gets us known. A lot of the larger companies couldn't afford to do this, but we have a small overhead."

She also said that banks would not buy from the firm solely to score CRA points.

"We certainly wouldn't recommend that somebody buy the RTC paper from us just for the glitter of putting it in their CRA file," Ms. …

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