BY VINAYA SAKSENA

CENTRAL FALLS — A Rhode Island-based bank announced on Tuesday its intention to donate one million dollars to local community organizations in Rhode Island and Massachusetts, as part of a restitution agreement it had reached with federal regulators for past violations, prompting a positive reaction from local politicians and community leaders.

At the Broad Street headquarters of the advocacy group Progresso Latino, officials with the Cranston-based Domestic Bank were joined by local leaders in touting the bank’s donation, which bank representatives said would be used to help fund financial literacy programs in both Rhode Island and Massachusetts. The announcement was met with praise from Central Falls Mayor Charles Moreau, who thanked the bank representatives and community leaders present. The mayor said that the news of the donation was particularly welcome in light of the current economic downturn, which he said was manifested locally in the ever-increasing number of boarded up homes in the city.
 “If we’d done this some time ago, I don’t think we’d be in the situation we are in now,” Moreau said. “With your participation and your help, we’ll all get through this and in the end, we’ll be much better off.”
According to a Domestic Bank press release, “nearly 50 percent” of the donated funds will be given to United Way of Rhode Island, which will in turn distribute the funds among local organizations, including the Catholic Diocese of Providence, Progresso Latino, the Urban League of Rhode Island and others. The press release noted that recipients were chosen “who can best reach the state’s minority and underserved populations at the grassroots level.”
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Both bank representatives and community leaders agreed that financial literacy was important, particularly in the aforementioned “underserved” communities. Domestic Bank President and CEO Dean Holt noted that a family’s financial status could affect its wellbeing in ways that went beyond the ability to pay bills, determining the level of stress within a family.
“When people don’t have money problems, it’s such a relief,” Holt said. “That causes more family dysfunction than anything else, I think.”
And knowing how to avoid the pitfalls of a complex financial world can make all the difference in the world, the event’s speakers said. Moreover, Progresso Latino Director Ramon Martinez said, those who have this knowledge should share it with others to increase its positive effect.
“Knowledge is power,” Martinez said. “But shared knowledge is empowerment.”
This is not the first time that Domestic Bank has been involved in a financial literacy program, having run its own in the past. However, as the company’s press release noted, this particular donation also serves to satisfy “a recent agreement with the Office of Thrift Supervision.”
The press release did not provide further details of this agreement. However, a document from the Office of Thrift Supervision (OTS), which is part of the U.S. Department of the Treasury, indicated that Domestic Bank and its subsidiary, Intervale Mortgage Corporation, had agreed to pay a fine of $850,000 to OTS, in addition to the donated funds announced Tuesday. The fine, which Domestic apparently agreed to pay, stemmed from what OTS called “unsafe and unsound banking practices” on the part of Domestic and specifically its Intervale subsidiary, with OTS alleging that the company “also engaged in residential mortgage lending activities that were conducted in a way that was unsafe and unsound, deceptive, inconsistent with economical home financing, not in accord with industry best practices and failed to conform to the guidance in the Federal Banking Agencies’ 2001 Expanded Guidance for Subprime Lending Programs and the related 2007 Statement on Subprime Lending with respect to avoidance of abusive lending practices.”
Jennifer Bramley of Vision Strategies, who was serving as a spokesperson for Domestic Bank, pointed out that Domestic had discontinued offering the products that had led to the aforementioned allegations, and had ceased its relationship with Intervale. She also noted that Tuesday’s donation announcement would merely be the first step in an ongoing effort on the bank’s part to help improve financial literacy.
“Indeed, there could be further donations in the future,” Bramley said. “This is a priority for Domestic Bank. And they do plan to continue tow work with all