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How One Big Bank Is Spurring Job Growth In Underserved Communities

When policymakers want to help people with low incomes get a mortgage, they typically offer some kind of subsidy or boost the flexibility of the underwriting guidelines. This week, the Federal Home Loan Bank of San Francisco will pioneer a radically different approach: It will try to turn more Americans into homeowners—not by giving them a break but, instead, by catalyzing the creation of good jobs in their communities. “What we’re doing is getting at the root cause” of why buying a house remains out of reach for many families, says Larry Parks, the senior vice president of external, legislative, and regulatory affairs at the bank, a cooperative that gives its member financial institutions inexpensive loans and risk-management tools so that they, in turn, can increase the availability of mortgages and stimulate community development. “We’re changing the thought process.” At the center of it all is a Quality Jobs Fund, which the bank established after years of research and rumination by donating $100 million to the New World Foundation. New World will disburse money from the fund to nonprofit and for-profit “intermediaries” that promise to spur employment in areas that badly need it. The foundation will identify and select these organizations. They include job-training programs, social enterprises that aim to improve economic opportunities in disadvantaged neighborhoods, and entities that foster employee ownership. The first payout will be formally announced on Friday: $5 million to the Central Valley Fund, which provides capital to small and midsize businesses, mostly in poorer and underserved regions of California and the West. A GRAND EXPERIMENT It isn’t easy to be part of this grand experiment. The jobs eventually generated can’t be like those held by many millions of workers today, with lousy pay, no healthcare coverage or retirement security, and no prospect for advancement. Even with the unemployment rate at just 4.1%, “we have a jobs crisis in this country,” says Colin Greer, president of New World. Indeed, the “Quality” in the fund’s name is not some empty adjective.

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How One Big Bank Is Spurring Job Growth In Underserved Communities

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