November 1, 2012
I am honored to be here in Chicago once again at the National Community Investment
Fund’s Annual Development Banking Conference. And, believe me, after the storm on
the East Coast this week, I am very grateful to be able to join all of you today.
As you well know, the theme of this year’s conference is Responsible Banks, Strong
Communities, and I believe those four words can stand as a clear and concise
statement of the mission of the community development banking industry.
After all, if low-income communities are to become strong, they need financial services—but
not just any financial services. They need responsible financial services
that can offer people in the community a way to build wealth and participate in
the mainstream economy.
And that is the role of community development banks. They exist to offer a responsible
alternative to the check-cashing services and predatory lenders that undermine a
community’s financial stability and drain its wealth. Responsible banks do indeed
help to build strong communities.
So I would like to thank NCIF and all of you for everything you are doing to help
responsible banks be strong banks and provide the safe and affordable financial
services their communities need. You are truly making a difference, and the CDFI
Fund is glad to support you in your work.
The importance of partnerships
One of the many ways that NCIF is helping to strengthen responsible banks is through
the development of its Social Performance Metrics for measuring the social impact
of community development lending, as well as its Development Impact Dashboard format
for reporting that impact and telling the story about individual institutions and
I understand that NCIF is publishing Dashboards featuring 23 community development
banks this year, up from 16 in 2011. If that isn’t impressive enough, NCIF is also
beginning to explore ways for other organizations in the industry to become involved
in the whole matter of measuring impact.
That is an initiative that we at the CDFI Fund wholeheartedly support, because it
not only will advance the practice of measuring and communicating impact, but it
also will foster productive new collaborations that can only strengthen our industry.
Now more than ever, these kinds of partnerships are critical to the development
of our industry. In the wake of the financial crisis and the many challenges it
has created for community development banks, working together—pooling the expertise
and creativity and resources of diverse organizations—will enable our industry to
reach new levels of success.
So the CDFI Fund supports you and your efforts to collaborate and foster new partnerships.
And I want to emphasize that the CDFI Fund stands ready to work with you. We want
to be a strong and effective partner to the community development banking industry.
And at the CDFI Fund we are exploring stronger partnerships and working more closely
with regulators and other government entities that are critically important to CDFI
Partnering with the CDFI Fund
The question going forward, though, is what can we both do to build that partnership?
As you well know, the CDFI Fund offers a variety of programs that can strengthen
community development banks, including the CDFI Program, the New Markets Tax Credit
Program, the Bank Enterprise Award program, and the new CDFI Bond Guarantee Program.
These programs form the foundation for the partnership between the CDFI Fund and
the CDFI banking industry.
I believe that for our partnership to be strong and true, it needs to be about more
than programs. It needs to be about communicating and collaborating. It needs to
be about working together to ensure that the partnership is as effective as it can
be and is helping you increase your impact and serve your communities better.
So what I want to talk about today is three areas that I believe offer outstanding
opportunities for us to increase our communication and collaboration, and strengthen
our partnership. The first of these three areas is CDFI certification.
Now, I realize that, when I have spoken at this event in the past, I have discussed
the importance of being certified as a CDFI. But I feel the need to discuss it again
today, because becoming certified is an essential first step that many community
development banks continue to overlook.
Indeed, according to NCIF, there are several hundred banks and thrifts across
the country that could be certified as CDFIs by virtue of their superior community
development impact. However, as of July 31, 2012, only 81 banks and 54 depository
institution holding companies were certified.
Community development banks need to do better—much better. And I say this not because
I believe you should get certified for the sake of getting certified, but because
I know that getting certified can generate new opportunities for your organizations.
It will make you eligible for awards through the CDFI Fund’s programs and training
initiatives. It can also improve your ability to raise capital from other sources,
such as banks, foundations, and other government agencies. And while the process
of applying for CDFI certification does require some effort, it can also help your
organizations focus anew upon and refine your objectives, strategic plans, and operations.
So, I urge all of you that are not certified to get certified. And if you are certified,
I urge you to speak to your fellow banks and encourage them to get certified. And
remember, there is no opening or closing dates for certification applications. The
application period is ongoing, so there is no reason to put off applying.
The second area that I believe offers us an opportunity to strengthen our partnership
is our flagship program, the CDFI Program. Since 1994, the CDFI Fund has awarded
more than $1 billion in Financial Assistance and Technical Assistance awards through
the CDFI Program. Nevertheless, participation in the CDFI Program by CDFI banks
has been quite limited. In the FY 2012 round of the program, 389 organizations applied
and 177 received awards. Just 23 depository institutions applied, and 6 received
awards totaling $7.3 million.
It is encouraging that 26 percent of the depositories that applied received awards
in FY 2012. The larger issue, however, is that CDFI banks represented just 5.9 percent
of the entire pool of applicants. And the number of banks applying has remained
quite consistent in recent years. Since FY 2009, we have received between 25 and
29 applications each year.
The CDFI Fund hopes that the number of CDFI banks receiving awards through the CDFI
Program will increase in the coming years. And I can assure you that, as your partner,
we are exploring ways to support CDFI banks that apply for awards. These include
recruiting more application reviewers with community development banking experience
and expertise; incorporating additional training on CDFI banks in the guidance and
training materials that we provide to our application reviewers; and expanding the
CDFI bank-specific instructions and tips that we provide in materials for applicants.
As you may know, the first phase of our review process is conducted by external
community development professionals with guidance from CDFI Fund staff. These external
reviewers are assigned certain applications to read and score. We do our best to
assign applications based on each reviewer’s experience and expertise. Specifically,
we look at the reviewer’s experience with particular types of CDFIs—for example,
banks, credit unions, and loan funds—as well as the reviewer’s particular area of
expertise—affordable housing, small business lending, consumer lending, and so on.
I encourage those of you with banking expertise to become application reviewers.
Another suggestion I can offer is that those of you who have received awards from
the CDFI Fund consider providing application assistance to your peers. As successful
awardees, you have a wealth of experience to share with prospective applicants,
and I encourage you to share it. I also encourage NCIF and other organizations that
represent community development banks and Minority Depository Institutions to facilitate
opportunities for this type of knowledge sharing among their members.
Finally, the third area that I believe offers an opportunity for us to collaborate
is the CDFI Fund’s Capacity Building Initiative.
At the end of 2008, in the midst of the worst financial crisis in more than 50 years,
the CDFI Fund’s Community Development Advisory Board formed a special subcommittee
to examine the crisis and its effect on CDFIs across the United States. One clear
issue that emerged from the Advisory Board’s outreach was the need to strengthen
the capacity of CDFIs by offering more technical assistance and training. The result
was the creation of the Capacity Building Initiative.
We began by offering four training series created exclusively for CDFIs: Portfolio
Management, CDFI Capitalization, Foreclosure Solutions, and Financing Healthy
Food Options. More than 600 participants attended trainings in 15 states
in every region of the country as well as the District of Columbia. Nearly 1,000
people accessed virtual trainings through webinars. In addition, in the two years
since we launched the Capacity Building Initiative, more than 1,750 hours of technical
assistance have been provided to CDFIs as they sought to apply the lessons of the
trainings to their own organizations.
Unfortunately participation from community development banks at the trainings offered
through the Capacity Building Initiative has been limited. This is especially troubling
because we believe the trainings are so worthwhile. They offer excellent opportunities
for you to deepen your understanding of your business and to network with your peers.
And they are offered free of charge.
So, once again, I urge you to communicate with us. For example, we are exploring
the creation of a training program just for community development banks through
our Capacity Building Initiative. What kind of training do you feel you need and
what kind of technical assistance? Are there particular challenges that you are
facing and would like us to address? Please let us know. We want to help you succeed,
and to do that, we want to hear from you.
I also urge to you to take part in the trainings we are already planning to offer.
Later this month, we will be starting the training component of a new series called
Innovations in Small Business Lending. In fact, the CDFI Fund’s is contracting
with Deloitte Financial Advisory Services on this series and they are here at the
conference to discuss it with you.
I encourage you to participate and if you can’t attend a training in person, be
sure to visit the Capacity Building Initiative Resource Bank, which is also on our
website. There you will have on-demand access to the training and resource materials
used for some of the training programs offered through the Capacity Building Initiative.
Once again, these materials are free.
So, these are my thoughts about building a strong and effective partnership between
the CDFI Fund and the CDFI banking industry. I am sure you have thoughts of your
own, and I encourage you to share them with us. I will just repeat: Now more than
ever, we must all work together.
Looking forward, looking back
Earlier this morning you had the opportunity to hear Saurabh Narain speak about
the future of CDFI banking. I understand that his thoughtful observations will be
published as a white paper by the Federal Reserve Bank of San Francisco, and I would
like to offer my congratulations to Saurabh for making yet another important contribution
to the industry.
I will add that I hope that, in addition to looking forward at the future of CDFI
banking, you will all remember to take a look back at its past, because looking
back can remind you of why community development banking is so important and how
far it has come.
It can remind you that banks very much like your own have existed in this country
for more than a century to serve those that other banks would not—minorities, women,
It can remind you that the work you do is not just good—it is noble, because it
has the power to lift up people and communities and help them build a better life.
And it can remind you that, while the road you travel may not be easy, you do not
travel alone, because there are many others who share your vision and passion and
who will always be at your side.
The CDFI Fund is honored to share this road you are travelling, and we look forward
to working with you.