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 CDFI Fund Fifteen Year Anniversary

Remarks by Director Donna Gambrell at the National Bankers Association 85th Annual Convention

New Orleans, Louisiana
Tuesday, October 2, 2012


It is a pleasure to join all of you once again at the National Bankers Association’s annual convention.

One of the reasons I enjoy attending this gathering so much is that it gives me a chance to get in touch with the roots of the CDFI industry in the United States.

Those roots go back more than a century, and when we look back, we can see that organizations that were the forerunners of what we now call community development banks and Minority Depository Institutions (MDIs) were there at the very beginnings of our industry and have played a central role in its development.

Indeed, we can see a long and distinguished tradition.

It is a tradition that includes Capital Savings Bank, the nation’s first bank owned and operated by African-Americans, which opened in Washington, D.C., in 1888.

It is a tradition that includes the St. Luke Penny Savings Bank, created in Richmond, Virginia in 1903, by Maggie Lena Walker, the first African-American woman to establish a bank and serve as president.

It is a tradition that includes Banco Popular, the bank of the poor, established in Puerto Rico in 1893; the Bank of Cherokee County, founded by members of the Cherokee tribe in Hulbert, Oklahoma, in 1907; the Canton Bank of San Francisco, created to help the city’s Chinese community rebuild after the 1906 earthquake and fire; and the Women’s Savings & Loan, the first bank founded and operated by women, established in Cleveland in 1922.

And it is a tradition that includes the Negro Bankers Association—now known as the National Bankers Association—the nation’s first formal organization of minority bankers, established by C.C. Spaulding and Major R.R. Wright in 1927.

Community development banks also played a role in the founding of the CDFI Fund. In 1992, inspired by the success of Chicago’s South Shore Bank and Muhammad Yunus’s Grameen Bank, Bill Clinton, then a Presidential candidate, called for the creation of a nationwide network of 100 community development banks. That effort ultimately led to the passage, in 1994, of the Riegle Community Development and Regulatory Improvement Act, which authorized the creation of the CDFI Fund. Since its creation, the CDFI Fund has enjoyed broad bipartisan support and has seen its budget more than double under the current Administration.

So, when we look back, we can see a great tradition. Long before there was a CDFI Fund, and long before there were even organizations called CDFIs, there were banks that were dedicated to serving people that other banks would not. At once deeply visionary and deeply pragmatic, these organizations made it their mission to help their communities build financial strength so they could fight for their rightful place in the American mainstream.

And that great tradition lives on in the work of the National Bankers Association and its members, and in the work of community development banks and MDIs throughout the nation. So I am pleased and honored to be here with you today.

The unique role of community development banks

At the CDFI Fund, we have a deep appreciation for the work of community development banks and MDIs.

We understand that responsible banking services, such as checking and savings accounts, offer people in low-income communities a way to begin building wealth and participating in the mainstream economy. We also understand that when those services are not available—and all too often they are not available in low-income communities—people have to turn instead to check cashing services and other predatory lenders that undermine their financial stability and drain the community’s wealth.

So, we recognize that community development banks and MDIs are indispensable.

You are the ones that provide fair and affordable banking services that help people build a strong financial foundation. You are the ones that provide loans that build local businesses and create local jobs. You are the ones that provide responsible mortgages that foster homeownership and long-term financial well being.

Each of you truly is a lifeline for your community.

And we also recognize that the close relationship you have with your communities may at times present daunting challenges. When your communities struggle—and minority and low-income communities have struggled disproportionately during the recession—you may struggle, too. When your customers lose their jobs and see their savings dwindle and cannot make their loan payments, you may share their pain.

So, at the CDFI Fund, we appreciate the unique challenges you face, as well as the unique role you play. And that is why we are committed to supporting you and helping you serve your communities as effectively as you can.

Support for community development banks

The CDFI Fund offers a variety of programs designed to help CDFIs—including community development banks and community development credit unions—expand their capacity to serve their communities. These programs include:

  • The CDFI Program, our flagship program, which provides Financial Assistance and Technical Assistance Awards to certified CDFIs each year;

  • The New Markets Tax Credit Program, which is designed to attract new or increased investment capital to low-income communities;

  • The Bank Enterprise Award Program, which provides monetary awards to FDIC-insured banks for increasing their investments in CDFIs and for their own direct lending, investment, and service-related activities within economically distressed communities;

  • The Native American CDFI Assistance Program, which is designed to create and strengthen Native CDFIs; and

  • The CDFI Bond Guarantee Program, a new program created by the Small Business Jobs Act of 2010 that will offer CDFIs a new source of long-term, patient capital for loans and investments in low-income communities.

The CDFI Fund also offers a Capacity Building Initiative, which presents in-depth training for CDFIs on a variety of key topics, such as foreclosure prevention, small business development, and portfolio management. The initiative also provides direct, on-site technical assistance and individualized capacity-building plans for CDFIs that have attended one of the training programs.

Building stronger community development banks

When I spoke here a year ago, I said that I believed that MDIs may not be too big to fail, but they are too important. I still believe that. And I urge you, as I did last year, to evaluate your organizations and develop strategies that will enable you to meet the internal and external challenges you face.

To that end, I would like to offer a few suggestions that I believe can help you strengthen your organizations.

  1. Become a certified CDFI – There are 81 community development banks and thrifts that are CDFIs. To be eligible for most of the CDFI Fund’s programs, a CDFI must be certified. So I urge all of you to become certified if you haven’t already.

  2. Apply for an award from the CDFI Fund – Now I realize this point may seem obvious, but the fact is, participation in our programs among MDIs has been limited. Our Bank Enterprise Award Program has seen the greatest participation. In FY 2009, 26 of the 58 banks that applied were MDIs; 24 received awards. In FY 2010, 27 of 76 were MDIs; 25 received awards. In FY 2011, 25 of 82 were MDIs; 22 received awards. And for FY 2012, 25 of the 71 applicants are MDIs.

  3. But participation in the CDFI Program is another story. In FY 2011, of the 393 organizations that applied for an award through our CDFI Program, eight were MDIs; one of those received an award. And of the 403 organizations that applied for an award through the FY 2012 round, ten were MDIs; three received awards.

    So I urge you to apply for an award from the CDFI Fund. The CDFI Program in particular is the best source of long-term financing you will find anywhere. Now, I will grant that the award process is quite competitive, and I can’t guarantee that you will receive an award. But what I can guarantee is that, to quote hockey legend Wayne Gretzky, “you miss 100 percent of the shots you don’t take.” So I encourage all of you to shoot, and if you miss, to keep on shooting.

  4. Participate in the Capacity Building Initiative – I am afraid that the participation in the CDFI Fund’s Capacity Building Initiative among community development banks also has been limited. To date, just one community development bank—One!—has attended a training program. So I will emphasize that these trainings offer excellent opportunities for you both to deepen your understanding of your business and to network with your peers. And if you can’t attend a workshop in person, be sure to check out the Capacity Building Initiative Resource Bank on our website. There you will find the training and resource materials used for some of the training programs offered through the Capacity Building Initiative. And these materials are available at no charge to the general public and members of the community development industry.

  5. Attend industry conferences– What I said about the Capacity Building Initiative trainings also applies to industry conferences: They offer an excellent opportunity for you to network with your peers and to help raise the profile of the community development banking and MDI industry. So I encourage you to consider attending more community development conferences, including those that do not focus on banking. I also encourage you to be part of the panel discussions at conferences. You will not only share your perspective but also learn from the perspectives of those representing loan funds, credit unions, venture capital funds, and other sectors of the industry.

  6. Strengthen trade associations– The National Bankers Association, Community Development Bankers Association, and other organizations that represent community development banks and MDIs do an excellent job of advocating on behalf of their members. I believe there is also a need for these organizations to provide training and technical assistance that is tailored for their members. Associations that serve other sectors of the CDFI industry do this; for example, Opportunity Finance Network provides training and technical assistance for loan funds, and the National Federation of Community Development Credit Unions, for credit unions. Again, this will create one more opportunities for community development banks and MDIs to increase their understanding and to share their knowledge and best practices with their peers.

  7. Communicate with the CDFI Fund– The CDFI Fund really is committed to supporting you, and to be as successful as we can be, we need your feedback. So I urge you to communicate with us. Tell us what you need—what kind of training programs, what kind of technical assistance. Let us hear from you, so we can explore new ways to meet your needs. We are counting on you.


Now, I certainly realize that the past few years have been a challenging period for community development banks and MDIs. Yet, I feel very optimistic about the future.

The reason I am filled with hope and believe you can be filled with hope, too, is that I have tremendous faith in the vision, the compassion, and the determination that have always managed to water the roots of the CDFI industry, even in the midst of the most crippling droughts.

Indeed, I have faith in the vision, compassion, and determination of people like Maggie Lena Walker, founder of the St. Luke Penny Savings Bank. She once said:

First we need a savings bank. Let us put our moneys together; let us use our moneys; let us put our money out at usury among ourselves, and reap the benefit ourselves. Let us have a bank that will take the nickels and turn them into dollars.
We still need banks that will take the nickels and turn them into dollars—we need them more than ever. And the good news is that I am hardly the only one who believes that.

All across this nation there are people—people like you—who are determined to build those banks and make them succeed. They know they will surely face difficult times, but they also know they will endure, just as those who came before them endured.

So let us all work together. Let us all contribute our own vision, compassion, and determination, and continue building the great tradition of which we are all a part.

Thank you.

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