July, 2010

As we near the mid-point of the fourth quarter of the 2010 fiscal year, the CDFI Fund continues to build on the strong foundation we have established since our inception. Our fifteenth anniversary year has been one of great progress, but many challenges facing underserved and low-income communities persist. We remain relentlessly focused on expanding our support to CDFIs in this critical moment in our history.

The CDFI Fund has created a great deal of momentum these past few quarters as the nation navigates its way out of recession. We had two significant award announcements that are directly supporting communities still struggling with economic growth: the Native American CDFI Assistance (NACA) Program, and the Financial Education and Counseling (FEC) Pilot Program.

On April 30th, we were joined in Albuquerque, New Mexico by U.S. Senator Jeff Bingaman to award over $10 million in NACA Program grants to 45 deserving Native CDFIs. The innovative programs, products and financial services developed by these CDFIs will foster economic growth and development in Native communities across the nation.

Then, on May 13th we announced the recipients of the first FEC Pilot Program awards. Five organizations received a total of $2 million in grants that will be used to establish and expand financial education and counseling services for prospective homebuyers. A new program in the CDFI Fund’s tool kit, the FEC Pilot Program expands the CDFI Fund’s ability to effect positive change in the realm of financial education. The courses, mentoring, and budgeting tools offered by the recipients of these grants will help prospective homebuyers to confidently navigate the real estate market, a key element to inclusive economic recovery.

Earlier in the year, another important accomplishment for the CDFI Fund was our first time co-sponsoring a major regulatory conference: the 2010 National Interagency Community Reinvestment Conference in New Orleans, Louisiana. The conference, held from March 14th-18th, enabled participants to deepen their knowledge of the Community Reinvestment Act and share community development best practices with colleagues.

It was also an opportunity to focus on the impact that CDFIs have had on the area’s recovery from Hurricane Katrina, from financial services to neighborhood revitalization to clean energy development. Now, as the Gulf Coast region faces the challenge of recovering from the massive environmental and economic crisis caused by the oil spill, some of the same CDFIs that established recovery efforts after Hurricane Katrina are finding new ways to assist local residents and workers in this difficult time.

It was inspiring to be in New Orleans and to witness the courage and strength of the community development efforts in that city. During my keynote address at the conference I remarked that New Orleans’ revitalization shows us “the possibility in the midst of the impossible.” I have witnessed that same ideal exemplified by hundreds of CDFIs across the nation helping distressed communities get back on their feet.

I am happy to report that there are several exciting events this summer that are highlighting and reinforcing these efforts on the national stage. In partnership with the U.S. Federal Reserve of San Francisco, Seattle Branch and other federal agencies, we are sponsoring a series of workshops for Native community economic development stakeholders. These workshops, held in cities across the nation, feature comprehensive informational sessions on federal assistance available to Native communities and provide valuable opportunities for networking with federal and regional economic development experts.

We are also on the verge of announcing over $100 million in awards under our flagship CDFI program – our largest ever regular appropriation round. The CDFI program awards, which will be announced in early August, provide financial and technical assistance to a wide variety of CDFIs across the country, all of which are dedicated to improving economic conditions in struggling American communities. Thanks to strong support from the Obama Administration, our assistance to these organizations working on the frontlines of economic recovery continues to increase.

Our focus so far this year was not only about the immediate needs of the country, but also about the future as well. To celebrate the fifteenth anniversary of the creation of the CDFI Fund, we embarked upon a series of nation-wide Listening Sessions focused on reviewing our entire authorizing statute. The goal was to have a candid conversation with our partners about how to position the CDFI Fund to lead another fifteen years of growth for CDFIs and the entire community development finance sector. The sessions were a success beyond even my expectations—the feedback that we received from clients who took the time to attend sessions in Washington, DC, Chicago, Denver, and Los Angeles, participate in our conference calls, or submit written comments on our statute, will be instrumental to our development of specific proposals for increasing our support to CDFIs. I look forward to working with our Advisory Board as we utilize this feedback to support the future growth and direction of the CDFI Fund.

Looking ahead, we are eager to hear from Congress about our fiscal year 2011 appropriation. The President’s fiscal year 2011 budget continues to provide strong support of our efforts by proposing that the CDFI Fund be allocated $250 million in resources, a number that is on par with our current budget. The President’s belief in the CDFI Fund’s programs underscores the great responsibility we have to the American people.

As of this writing, there are two historic pieces of legislation with significant implications for the CDFI industry that should be noted. With the President’s signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the first bill provides two new programs at the CDFI Fund that will combat predatory lending practices by promoting financial education and small dollar consumer loans. Pending final vote, the second bill establishes lending initiatives for small businesses and includes a provision that will allow loan funds to borrow capital in the amount of up to 5/10 percent of their assets at a rate of two percent for eight years. By increasing essential protections for consumers and helping make sure the financial system better meets the credit needs of communities and small businesses where it can do the most good, these measures will help ensure a more equitable recovery and address deep-seated problems that have plagued low-income communities for years.

Finally, in the next few months, the CDFI Fund is planning to announce the fiscal year 2010 award recipients of several major programs. In addition to the CDFI Financial and Technical Assistance grants, we will also announce the Bank Enterprise Awards recipients in August. In September and October, the CDFI Fund will announce $4.15 million for the second round of the Financial Education and Counseling Pilot Program, and $80 million in grants provided through the inaugural round of the Capital Magnet Fund. And finally, pending Congressional authorization, the CDFI Fund plans to announce $5 billion in New Markets Tax Credit allocation authority at the end of the year.

Fiscal year 2011 promises to be a busy one for the CDFI Fund as we work on new initiatives and continue to administer the critical community development programs in our portfolio. I have confidence that the CDFI Fund staff will meet the challenges ahead with their usual dedication and exemplary service. We keep our core mission in the forefront of our daily work -- to serve distressed communities throughout the United States—and we are better situated than ever to provide for those in need.

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