Featured Guest: Jeannine Jacokes

Jeannine Jacokes is Chief Executive Officer of Community Development Bankers Association (CDBA) and Partners for the Common Good (PCG). CDBA is the national trade association of the community development banking industry. CDBA educates policymakers, regulators, legislators and the general public on the work of community development banks. CDBA also leads the growth and development of the sector through peer learning and education on Federal resources that promote access to capital and financial services in distressed and underserved communities. Currently there are 165 CDFI banks nationwide.

PCG is a nonprofit CDFI loan fund that operates as a national wholesale participation lender, PCG works with 50+ regulated and non-regulated Community Development Financial Institutions (CDFIs) across the United States to finance working capital, affordable housing, community facility, and commercial revitalization projects that create benefits for low income people and communities. PCG has $185+ million in total assets under management, including $50+ million in New Market Tax Credit projects. PCG also operates CapNexus, a groundbreaking online platform designed to get capital to communities by matching aligned community development lenders, borrowers and capital sources.

Jeannine previously served as a senior member of the management team at the U.S. Department of the Treasury’s CDFI Fund and played a leadership role in designing and implementing the Fund’s programs and operations. Formerly senior policy staff for the U.S. Senate Committee on Banking, Housing and Urban Affairs, she played a key role in drafting many of the laws that currently govern Federal housing and community development programs and which impact the availability of credit in underserved markets. Jeannine began her career at the U.S. Department of Housing and Urban Development. She holds a Masters degree in city and regional planning from the University of North Carolina at Chapel Hill and B.A. from Aquinas College in Grand Rapids, Michigan.

Jeannine serves on the Board of Directors of the CDFI Coalition and served as Board Chair from 2010-2012. She currently serves on the New Market Tax Credit Advisory Boards for three multi-year allocates — The Reinvestment Fund (Philadelphia PA), AmCREF New Market Tax Credit Advisory Board (New Orleans LA), Waveland Ventures (Milwaukee WI), Central Bank of Kansas City (Missouri), and Legacy Bank (Missouri). She served on the Board of Directors of the Opportunity Finance Network for six years and an Advisory Board Member for CDFI Assessment and Rating Service (now Aeris from 2006-2011. She formerly served on the Board of Directors for the Social Enterprise Alliance, the national trade association for the social enterprise sector, the Board of Directors of Women in Housing and Finance (WHF) (2001-2003), and as Board Chair of the Board of Directors of the Women in Housing and Finance Foundation (1998-2001).

Episode Transcript

[00:00:00] Jeannine Jacokes: Because of the really strong connection between financial services and the economy and how wealth gets made, I think that the financial services sector has a particular responsibility in terms of playing a proactive role, in terms of trying to stop inequities or at least reverse, slow down, reduce the racial equity gap that there is.

[00:00:29] David Reiling: Welcome to the NextGen Banker podcast where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I’m your host, David Reiling and I am very excited to welcome Jeannine Jacokes as our guest today. Jeannine, it is always great to talk to you. I’ve looked forward to talking to you and having you on the podcast. Thanks for being on the NextGen Banker today.

[00:00:51] Jeannine Jacokes: Well, Dave, thanks for having me.

[00:00:53] David Reiling: Absolutely. So for our audience, a little background on Jeannine. She is the Chief Executive and Senior Policy Advisor of the Community Development Bankers Association, known as the CDBA. She is also the CEO for Partners for the Common Good, a national CDFI non-profit loan fund. And Jeannine has served also as a Senior Program Manager at the Department of Treasury. She was a staff member on the U.S. Senate Banking Committee and worked for housing and urban affairs. So, Jeannine, welcome. And boy, we gave our audience there a little alphabet soup, an acronym soup. And so maybe let’s demystify those a little bit, particularly for our global audience. Let’s talk a little bit. What’s a CDFI? What does it stand for? And what does it mean?

[00:01:38] Jeannine Jacokes: Okay. CDFI is a Community Development Financial Institution. And basically this is a designation that’s provided by the U.S. Department of Treasury that essentially is a designation that you have proven that you are a financial institution that is principally focused on serving low and moderate income communities or other types of underserved market niches.

[00:02:05] David Reiling: Perfect. And if I was to put a little bow on that, each one of those certified CDFIs has to have a mission of community development and economic development. As well as when you say authentic and walk that talk, I believe the threshold is 60% of their services. Is that correct?

[00:02:22] Jeannine Jacokes: That’s correct. You have to demonstrate year in and year out that at least 60% of your total lending, by number and dollar amount, is focused on serving eligible types of target markets. So the way that I like to think of CDFIs as it’s a particular government designation that demonstrates the type of work that you do, but CDFI’s are really part of a, I’ll say, kind of a bigger movement within the banking sector that is really focused on mission oriented banking or values oriented bank.

[00:02:57] David Reiling: Got it. And so when we think of a mission and values in that broader sense, kind of just expanding, let’s say the CDFI certification that focus on so CDFI has particular than routes so low income is mainly a social or low income impact, so when you think of mission, can it also be environment?

[00:03:15] Jeannine Jacokes: Yes, mission can be environmental. It could be social. It can be any other designation that is focused on trying to really create greater value or benefits for greater society. It isn’t just about the bottom line of the bank and its business, it really is about using banks as a business model as a proponent for social change.

[00:03:43] David Reiling: Yeah, love it. And so in that context let’s go to maybe how, what type of CDFI’s are there. So we know there are CDFI banks, but what other types of CDFI’s exist as well?

[00:03:56] Jeannine Jacokes: Okay. CDFI is a really broad designation, includes several different types of business models, I’ll tell you. On the regulated financial institutions side, there are banks and credit unions. On the unregulated side, there are loan funds and venture capital funds. And I would say those are kind of the four broad categories of CDFIs. And then there’s some other business models that maybe straddles over some of those lines, but those are the four broad groups.

[00:04:25] David Reiling: Gotcha. Very good. And then in your role, in regards to the Community Development Bankers Association, how do you fit in to the group of CDFI banks?

[00:04:36] Jeannine Jacokes: Well within our universe of CDFIs that we just talked about, each of them is a really unique business model in terms of how they do their work, what sort of an operating environment they work within. And so what we are focused on are those CDFIs that are organized as banks and they’re domestic banks, so banks that are focused in the United States.

[00:05:03] Jeannine Jacokes: And so what we work on is really a combination of public policy advocacy, which is really where CDBA got started. But what we also focus on is peer learning amongst the banks, in terms of trying to do the work they do and do a better job, new ideas and so on and so forth, and really focus on trying to build their capacity to be mission-oriented institutions because CDFI banks or mission-oriented banks are really sort of a small set of a much bigger financial ecosystem, I guess, would be the way to talk about it. And so what they’re trying to do at least in the United States is still fairly unique and still kind of something that not all banks think about.

[00:05:49] Jeannine Jacokes: So I think one of the reasons they come together here as a way to be able to be with like-minded bankers that really see banks as a proponent, sort of as a vehicle, that can really promote social change, economic justice, so and so on and so forth. Whereas in the larger banking industry that isn’t necessarily very widely adopted. So it’s a place for those like-minded, mission-oriented bankers to share what they do.

[00:06:21] David Reiling: It sounds like, and I know this firsthand from experience, but when, when most of the time when people think of banks or bankers, they think of a very competitive and financial environment. But what you are describing is bankers coming together and sharing maybe best practices, and so is it a competitive environment or is it a cooperative environment?

[00:06:42] Jeannine Jacokes: I will say it’s a little bit of both. I would think it’s a peer environment where people can share. And I think the thing that makes this group unique is that because the work they do is hard, you know. Serving underserved communities is some of the hardest work there is in financial services.

[00:07:00] Jeannine Jacokes: So I think they all understand that it’s hard. And so there’s nothing. So it’s helpful to talk to others that are sharing the same challenges that you are. But at the same time, there’s a little bit of competitiveness. Everybody wants to be number one in whatever it is they do. But there’s nothing wrong with that, cause maybe, often that’s something that propels people to come up with new ideas and better ways to get the job done so.

[00:07:27] David Reiling: You know, the thing that I always find really interesting in significantly different than your, maybe your traditional banking and banking associations is when I think of the competition between the various CDFI banks, particularly within the CDBA is our competition is really about doing good.

[00:07:45] Jeannine Jacokes: Yeah, that is true.

[00:07:46] David Reiling: It’s less about the money part. It’s like how much good can we do? How many loans to affordable housing can we do? And how can I out do somebody else as opposed to I made $3 more than, than the other bank. So it’s an interesting, maybe a better for the world as opposed to a better for the bottom line type of a theory.

[00:08:06] David Reiling: CDFIs in their mission and their value focus. And so boy, we, and I’ll tell you from the perspective of being headquartered here in Minneapolis, diversity, equity, inclusion, particularly in regards to civil unrest, as a result of the injustices done here relative to George Floyd it is a movement in his forefront.

[00:08:27] David Reiling: And so we’re seeing, I’ll say, large corporates as well as others very interested in the CDFI bank or the mission and values bank banking movement. Your thoughts on is that sustainable? Are the large institutions in it for the longterm, or is this boy I’m gonna check the box for a few years until this blows over? What are your thoughts there?

[00:08:51] Jeannine Jacokes: Hmm, that’s a great question. I guess what I would say is the optimist in me wants to believe that there is a sustained commitment. The pessimist is that we’ve seen this before where issues or wax and wane in terms of the public’s attention. But I think it’s incumbent upon people that care about those issues to constantly be trying to get the bigger players that have the greater resources to continuously focus on these.

[00:09:24] Jeannine Jacokes: I think for banking, because of the really strong connection between financial services and the economy and how wealth gets made, I think that the financial services sector has a particular responsibility in terms of playing a proactive role in terms of trying to stop inequities, or at least reverse, slow down, sort of reduce the racial equity gap that there is.

[00:09:51] Jeannine Jacokes: They’re not the only factor that influences cause it’s a lot of different factors that come together. But I do think because of the role of financial services and wealth building, that it does create both a challenge as well as an opportunity for banks to always be engaged on this set of issues.

[00:10:10] David Reiling: Yeah. And the thing that I hope that happens in this, and again, I’m with you on the optimistic view that this time is different and it’ll stick and be sustainable, is to be able to get across to the larger, whether it’s banks or corporates, that your investment into a CDFI bank is not only, you’re going to find the social impact, but you’re also going to see a return on your investment. It may not be the best return. We’re not a hedge fund.

[00:10:38] David Reiling: But the fact is this doing well and doing good concept, I think, if really demonstrated to a larger corporate, can say, “Wow, I can actually make an investment in this bank, I can get the impact I want and my deposit, or my investment, just keeps going and going and going.” If we can get that across, while it may not be the highest returning investment in terms of dollars, the combination between the social or the environmental and the dollars hopefully gets them hooked. And so I’m a little optimistic on that side, but that’s my hope.

[00:11:12] Jeannine Jacokes: Well, I’m in the same camp. Survive. I’ve got that same degree of optimism. But I also think that big business needs to pay attention to what consumer trends are. And consumers want to see, want to do business, to an increasing degree. And depending upon what age cohort you’re talking to, the younger the age cohort, the more they value corporations that align with their values and being the customers of corporations that align with their values. Whether it’s promoting investment in communities, promoting the environment or any kind of other cause I think that is also good business, I think increasingly, so for corporations to pay a lot of attention to those very strongly held consumer values.

[00:12:01] David Reiling: Yes. And if I would say anything about particularly that younger generation, their ability to seek out and sniff out the authenticity in it, as well as the lack of authenticity.

[00:12:14] David Reiling: And so that’s where boy, you do it for a couple of years and then a corporate pulls out,. Someone’s going to notice, or someone’s going to ask that question. And so I think it’s in that space as well. So as we think about this mission driven values, driven banking movement, it sounds like there’s an opportunity for a big future. Are there also challenges that go along with?

[00:12:38] Jeannine Jacokes: Absolutely. I would say the opportunities I think are sort of abundant, but I think whether small financial institutions can really seize upon that opportunity is first recognizing what an opportunity it is. And investing in communities, I would have to say if you go backwards, 20, 30, 40 years, nobody would have seen that as a viable business model.

[00:13:05] Jeannine Jacokes: But I think today it certainly is. Banks have always played this role within their communities in terms of promoting investment in neighborhoods and in people, I think the great challenges are going to be. (First) These are small institutions for the most part so they’re usually resource constraint.

[00:13:27] Jeannine Jacokes: I also think it’s going to be breaking from the traditional banking mindset that it’s all about it’s money and there’s only one bottom line and so there being multiple bottom lines. I also think that technology is important ,paying attention to technology because people are always going to need financial services. But I think what’s happened in the last couple of decades with the entrance of new kinds of technology companies and so forth, that it’s giving people choices as to how they can get their financial services.

[00:14:02] Jeannine Jacokes: I still believe that it’s the local financial institution that’s based in the community that’s always going to have the upper hand in terms of being able to create that level of community change, but their business models have to change to be more efficient. And that’s where I think technology has the potential to really help in terms of making the business model more sustainable over time.

[00:14:25] David Reiling: Yeah, I like it, well said. And I think that the opportunity to partner, in this particular case, with financial technology companies that have those capabilities, I think can really propel those mission-driven banks. But you’re right, the challenges are size and the investment it takes to get there. And really the mindset in which to be a part and engage in a cooperative type of partnership to bring about that new technology in a delivery system.

[00:14:54] David Reiling: So Jeannine, I want to switch gears with you because during the long course that we’ve known one another, I have learned more from you about legislative and government engagement than anyone else. And when I’m thinking about the next generation of bankers not everyone is so aware of engagement with government and legislation. As a matter of fact, I would really like to, in some ways, demystify a little bit what people see on TV versus what actually happens in reality. So let’s start with this, can you speak maybe to the power and the importance of legislative engagement as it pertains to being in banking

[00:15:38] Jeannine Jacokes: Sure. Well, I think with any kind of legislative or public policy related thing, first of all, it comes down to what kind of a world do you want to live in? First and foremost. And I think the second is that always recognizing that the people that you’re going to talk to they’re people. Period. Talk to them like you would anybody else in your community?

[00:16:04] Jeannine Jacokes: When I worked on the hill, I worked for the Senate Banking Committee and I worked for the Chairman of the committee who was a Senator from Michigan. I handled housing and community development, was my primary portfolio, and whenever an issue would come up there would always be this line of different trade groups that would come up and say, “Oh, this is our position on this issue. Blah, blah, blah, you should do this.” But what I was always surprised by is who I didn’t hear from. And often who I didn’t hear from were people in the state.

[00:16:39] Jeannine Jacokes: Now, one of the things that I knew is that whenever I would go to brief my Senator on any issue his first question was always the same question. And that question was, how does this impact Michigan? Because he understood he was there to serve the people of the state of Michigan. And so what I had to do is I had to find inside the state those people in affordable housing, community development, financial services, that really were the expert on the issues.

[00:17:08] Jeannine Jacokes: So over the time that I was there, you kind of had this handful of people that would always be your first phone call and I would often be surprised by as they would be surprised that we would reach out to them. Like, I didn’t think you would care what I thought on this issue.

[00:17:26] Jeannine Jacokes: And so I think what the goal of any banker should be is they want to be one of those five or six people in that congressional office that when an issue comes up on banking, in your case Minnesota where your based, that the two senators offices, your Congress person’s office, like, “Well, I’m going to call the folks at Sunrise because I know they’re going to have something to say on this issue.” So that should be every banker’s goal is to be one of that handful that their elected representatives go to. But you talk to them like people, period. So.

[00:18:04] David Reiling: So tell me this. So if I’m your typical banker I’m out there, I’m working. How would a common person begin to engage with, let’s say a Senator or senator’s office, just to introduce themselves or to begin to develop that relationship on their path to being that first phone call?

[00:18:26] Jeannine Jacokes: Well, I think the first thing is you call up, introduce yourself. I mean, that sounds so silly, but that’s like so basic. And you can start with the district office because every Senator has got a district office, every Congress person’s got a district office. Make yourselves known, invite them to come to your bank, come and see, invite them to an event. Keep them on your list, just like they’re any kind of customer. Keep them in the loop, which that sounds so simple. And then when issues come up, you give them a call and you say, “Hey, this was important to me.” And even though there’s this very popular perception that, “Oh, it’s all about money. It’s all about who gives money in politics.” And that wasn’t my experience.

[00:19:10] Jeannine Jacokes: People knew who elected them and those elected officials want to always have their finger on the pulse as to what’s going on in their state and in their district. So to the extent that you can tell them about this housing project that you just finished that grocery store you just did the ribbon cutting on. They want to know about that kind of stuff, because they want to know what’s going on.

[00:19:37] David Reiling: Yeah. And I learned from you to never underestimate the power of the projects in their district. They want to know what’s going on from their own backyard. And if they know that there’s a new grocery store, there’s a new, affordable housing complex, those are things that are very valuable to them in terms of progress. And maybe getting a little credit here and there, but the fact is, is they need to know as much as you’d like to tell them.

[00:20:02] Jeannine Jacokes: That is correct.

[00:20:04] David Reiling: So what you’re describing to me is not what I see on TV. It seems like TV is there’s two parties and they hate each other and they’re yelling and screaming all the time. Is that the way it works in DC or is something else going on in terms of engagment?

[00:20:22] Jeannine Jacokes: Well, I would say a lot of what you see on TV, I think there’s an interest in the news media in terms of hyping some of it, because that makes for good TV. Good TV, shall we say?

[00:20:35] Jeannine Jacokes: But I still think that your elected officials still want to know what’s going on inside of their community and more so than anything else. That’s what they know they’re there to do. To represent you, to represent the place that they were elected from. So, I mean, that’s one of those things that’s not very sexy to show on TV or in the news media. But I think that for elected officials that is what’s important is being connected to their community.

[00:21:02] David Reiling: Yes. And again, another learning that I got from you was no matter what your particular political persuasion may be, you should reach out to both parties with whatever the issue is, particularly if it’s in your district or in your area or in your state.

[00:21:19] David Reiling: Because both sides want to know what’s going on, like as you had mentioned, in their backyard in order to represent their constituents well. And so I found in our experience of going to the hill, that things were much more civil in terms of, here’s the issue and here’s where we stand. Now, they may disagree or have a different viewpoint of it, but at least there’s understanding as to the issue and where the position is.

[00:21:44] David Reiling: And people have said their piece and in a very civil way, in a constructive way. And you move on. And it really is as simple as calling up the district office and making an appointment, have a cup of coffee with the staff person that represents and that’s the beginning of a relationship that, what we find, is a very long-term relationship with a politician or government official.

[00:22:09] Jeannine Jacokes: Yeah, well, I guess what I’m going to say, David, what you describe, I think is probably more the norm for people that interact with their congressional offices. And sometimes, I feel like if somebody goes and has contact, if they don’t get to talk to the elected members, that somehow that’s not as good as talking to the staff.

[00:22:29] Jeannine Jacokes: You know, one of the things about talking to the staff is that’s who the Senator listens to. The Senator can’t be everywhere all at the same time, but they usually trust those staffers to be able to listen to the stories that they’re hearing and to be able to keep them informed.

[00:22:46] Jeannine Jacokes: So developing relationships with those staff are critically, critically important. And it’s not second best because they really are trying to have the interest of the district and the member at heart.

[00:22:59] David Reiling: Very good. All right. So I got to do a quick shift. It’s a very related issue, but in terms of making regulation. And so similar to weighing in on the legislative side, it’s the creation of new or modifying regulation. And so usually there’s a process, and you can tell me if I’m missing something here. A notice of proposed rulemaking. There’s usually some type of comment period where banks or bankers can weigh in or community can weigh in. And then some type of final, I guess, a rule that comes out with a date.

[00:23:33] David Reiling: Now, let me ask you this, is making regulation easy? It seems like it’s kind of a 1, 2, 3 step process. What are your thoughts? Did I miss any steps?

[00:23:42] Jeannine Jacokes: I would say in a broad brush that’s correct. I think it’s a little bit, depending upon the complexity of the issues. But I think in the same regard, I think making the assumption that nobody cares about what I think is absolutely the wrong mindset. Because having been inside of an agency after I went to the hill, I went to the treasury department and got to be part of that process too. And I think in order to make sure that things get implemented the way, whether it’s a regulation or a program, in order for it to be implemented in a way that is actually going to help and achieve the goals.

[00:24:22] Jeannine Jacokes: Whether it’s in the community or in terms of regulation of the financial system everybody’s got a way in. And it’s more important to say, sort of like, sitting on that side of the table, the thing you hated was to get a letter that said, “I hate what this regulation does, but then never providing a constructive alternative.”

[00:24:45] Jeannine Jacokes: You know, when I was sitting in that seat, those people that can say, “Well, this doesn’t work, but here’s another way to get to the same place that’s going to be more feasible and more realistic and so forth.” That’s actually more helpful to people sitting inside the agency because they got to figure out how to implement this thing that Congress just passed. And having specific suggestions on how to make it work, I think they always welcome.

[00:25:14] David Reiling: Yeah. And that is a really important point because I didn’t understand that in my early days in banking that by the time it gets to the regulatory agency, Congress has made a law. I mean, they have to implement. And so to say that you hate it and you don’t want it is unproductive because there’s going to be something. You can either be part of it and shape it and mold it so it works to the best of its ability. Or you can sit on the sidelines and let everybody else do it. And I can guarantee you’re probably not going to get what you want by doing that.

[00:25:45] David Reiling: I was also amazed too, on the number in the variety of different constituents that weigh in on different regulations. A lot of community groups weigh in on things. You might have the real estate industry, you know, the different industry groups, depending on how it impacts them. And so it was a regulation, particularly when it comes down to banking, impacts so many different industries that money gets lent to that a lot of different constituents weigh in. And so it is very particular and important that bankers weigh in specific to how it impacts them.

[00:26:19] David Reiling: So Jeannine, we’re coming near the end here. And so I have to ask you the question, in your opinion, this is the NextGen Banker question, what does the next generation of banker need to look like? What do they need to possess in skills and abilities and mindset? How do you kind of envision what that NextGen banker looks like?

[00:26:41] Jeannine Jacokes: Okay, well, I’m going to just take one of those things on the list because you could have a whole program on every single one of those. And I would say, I think the NextGen banker is sort of two different things, I guess I would like to say.

[00:26:54] Jeannine Jacokes: I think the first is the mindset in terms of recognizing the role that banks can play in terms of improving the economic life conditions, opportunity, reducing the racial wealth gap, sort of that whole basket of things, is understanding what a fundamental role bankers can play in terms of shaping their community and how a bank can be an agent of change within their community. So I would say for the next generation bank, that’s probably the number one thing that I think they need to think about because that’s where the opportunity lies I think.

[00:27:33] Jeannine Jacokes: The second is to be open-minded about how do you get the job done and to think creatively. So I think there are some things that are tried and true about banking that bankers should always do. At the same time be willing to look at what some of the new technologies, technology players may be able to offer in terms of how to get the job done.

[00:27:55] David Reiling: Well, fantastic. Jeannine, thank you so much for being on the NextGen Banker podcast. It’s always great to get your insights. Thanks for educating us on not only CDFIs and community development, banking, and mission driven banking, but the government and legislative side. As well as the mindset around banking for good, as well as that open-mindedness in terms of that canvas of banking and how to create new.

[00:28:21] David Reiling: So Jeannine, thanks so much. Great to talk to you.

[00:28:24] David Reiling: Okay. Thank you, David. And thanks for having me on.

[00:28:29] David Reiling: For this episodes musical feature. We are showcasing Wayne Everett. Wayne is a California based singer songwriter whose most recent album Two Ghosts was released in April 2020. Two Ghosts weaves together the threads of ocean haze, indie psych delicate jangle pop, shimmering swirls of shoegaze and languid ballots all built on a foundation of tasteful meticulously crafted songwriting. Here is The Smallest Earthquake by Wayne Everett.

(song plays)

[00:29:16] David Reiling: That was The Smallest Earthquake by Wayne Everett. You can find more of Wayne’s music at wayneeverett.com Off Site Link and on Spotify and apple music. If you would like your music featured on the NextGen banker podcast, email nextgenbankerpodcast@gmail.com Off Site Link with a link to your music and website. Thanks for listening to the NextGen Banker podcast.

[00:30:06] David Reiling: And we’ll see you soon.