Introduction
It is a pleasure to be here with all of you once again at the National Federation of Community Development Credit Unions' Annual Conference on the Serving the Underserved. It is a special privilege to have this opportunity to speak at the luncheon honoring the 2012 recipients of the Annie Vamper "Helping Hands" Awards.
The "Helping Hands" Awards were established in 1993 to acknowledge individuals whose commitment to the community development credit union movement carry on the legacy of service of the late Annie Vamper, who began working as a volunteer at a credit union in 1958 and, over the next three decades, rose to become one of the leading lights of the movement, eventually serving as the Federation's Associate Director.
This year's recipients of the "Helping Hands" Award are very deserving of the tremendous honor being bestowed upon them today. In his more than 25 years as a member of the board of Mt. Zion Indianapolis Federal Credit Union, Phillip H. Conner has become one of the credit union's most valuable assets and has played a key role in helping to reduce its delinquency rate to near zero. And Helen Godfrey-Smith, president and CEO of Shreveport Federal Credit Union, has not only built her own organization into a powerful force in her region but has also mentored credit unions throughout the United States and around the world.
Phillip Conner and Helen Godfrey-Smith truly exemplify the credit union philosophy of "People Helping People," and, on behalf of everyone at the CDFI Fund, I would like to offer both of them my heartfelt congratulations and thanks for everything they are doing to strengthen the community development credit union movement. Our industry is blessed to have leaders like Phil and Helen on our side.
The example of credit unions
Now, as you all well know, the United Nations General Assembly has declared 2012 the International Year of Cooperatives, and I believe that Phillip's and Helen's credit unions - and all community development credit unions - exemplify the theme of the Year of Cooperatives: "Cooperative Enterprises Build a Better World."
Indeed, United Nations Secretary-General Ban Ki-moon has said that "Cooperatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility," and nowhere is that commitment to integrating economic and social goals better demonstrated than in the work of community development credit unions.
For community development credit unions do not exist for the benefit of shareholders. They exist to serve their members, are owned and governed by their members, and share their profits among their members. They are true practitioners of economic democracy, embodying the spirit of "government of the people, by the people, for the people."
Today, the cooperative spirit that guides community development credit unions is needed more than ever. At a time when our nation still struggles to recover from a deep and prolonged economic crisis, we would all do well to remember that we can move forward best if we move forward together. Credit unions offer us that example. They show us that our nation can be stronger when we include those that have been excluded, and when we seek to build institutions that are both sustainable and just.
The CDFI Fund's support for credit unions
That commitment to building sustainable and just institutions is something that is shared by all CDFIs. And that is why the CDFI Fund is so deeply committed to supporting the growth of CDFIs, including credit unions, throughout the United States.
Indeed, our support for community development credit unions has been strong and is getting stronger.
The CDFI Fund is the single largest source of grant capital for CDFIs in the United States, and since 1994, we have provided over $110 million in Financial Assistance and Technical Assistance awards to credit unions serving low-income and underserved communities across the country.
In the FY 2011 round of the CDFI Program, 25 of the 155 award recipients were credit unions. Twenty credit unions received Financial Assistance awards totaling $25.3 million, and five credit unions received Technical Assistance awards totaling nearly $333,000. When compared to the FY 2010 round, this is over a 100 percent increase in the dollars awarded to credit unions. Yes, you heard me correctly. The net awards to credit unions rose from $12 million in Financial and Technical Assistance awards in FY 2010 to $25.6 million in FY 2011!
The number of certified credit unions continues to grow as well. As of May 31, 2012, the CDFI Fund had certified 992 CDFIs, and 221 of these - or 22.7 percent of all CDFIs - were credit unions. One year earlier, we had certified 202 credit unions, so the number of certified credit unions has increased by almost 10 percent just in the past 12 months.
This was achieved through a lot of hard work by the CDFI Fund staff, who have significantly reduced the processing time for certification applications. I can assure you that, as the CDFI Fund continues to increase its staffing resources for certification reviews during the remainder of this fiscal year, we will continue to look for new ways to enhance our certification review process.
We have made progress on another issue that I believe is of great interest to the Federation and its members: the accountability of a CDFI's governing board to the CDFI's Target Market. At this time, we are still working to develop guidance on this issue, so I cannot give you any specifics right now, but it will be issued during the current fiscal year. We look forward to continuing to work with the Federation on defining the synergies - and the potential pitfalls - in aligning membership voting with Target Market accountability as it relates to a credit union's governing board.
I can tell you that the CDFI Fund needs to ensure that the resulting guidance fully supports the longstanding commitment - which is at the very core of CDFI certification - that the governance of any certified CDFI be highly accountable to the Target Market.
I am very pleased by the CDFI Fund's recent collaboration with the Federation. We are working together more closely than ever to help both of our organizations succeed - just one more example, I believe, of the cooperative spirit in action.
I will mention a few other issues.
Some of you have inquired about the responses we received to our Request for Public Comments on the CDFI Program application. The comment period opened last March 19 and closed on May 18, so we are just beginning to review and analyze the comments. We expect the process to take several more weeks, and we will of course announce our conclusions about any changes to the application process as soon as we possibly can. In the meantime, we released all of the comments we received on June 5, and you can read them on the CDFI Fund's website.
I know, too, many of you are interested in our timetable for the CDFI Program. What I can say is that we expect to announce the awards for FY 2012 by early August and open the FY 2013 round of awards in the fall. Once again, we will announce exact dates on our website as soon as we can, and I encourage all of you to apply.
Finally, I will give you a brief update on the new CDFI Bond Guarantee Program. As you probably know, the CDFI Fund is the administrator for the program, established by the Small Business Jobs Act of 2010, to provide CDFIs a new source of long-term, patient capital for loans in low-income communities.
So far, we have hired full-time staff to lead the program, published a request for public comment and reviewed over 60 response letters, facilitated an industry listening session, and developed a financial model for subsidy rate calculations required for issuing guarantees under the program. We have worked closely to obtain the Office of Management and Budget's approval of the credit subsidy model, which was a threshold that had to be crossed in order to move forward with the program. We are now in the final throes of drafting program regulations, which we intend to publish by the end of September so that we can begin program implementation shortly thereafter. Program implementation, however, is dependent on Congressional authorization, so we are now working proactively to get the legislative authority to move the program forward. The President's FY 2013 Budget includes support to implement the program and the specific appropriations language mandated by the Federal Credit Reform Act.
Looking ahead
As I said, it is always a pleasure for me to join you each year at this conference. But this year it is especially poignant. And that is because this year we are saying goodbye to Cliff Rosenthal, the Federation's president and CEO for more than 30 years.
You will all have a chance to hear Cliff's farewell address tomorrow morning. But what I would like to express here today is just how much I and everyone at the CDFI Fund appreciate Cliff's contributions to our industry. It is no exaggeration to say that the Federation and the community development credit union movement, as well as the CDFI Fund and the CDFI industry, would never have reached the heights they have reached without the vision and leadership of Cliff Rosenthal.
Cliff joined the Federation in 1980 and, under his leadership, the organization has quadrupled its membership and developed a broad range of programs to reach underserved populations. And as a co-founder of the CDFI Coalition, Cliff wrote the concept paper that became the basis for the CDFI Fund and worked tirelessly to advocate for the creation of the CDFI Fund in the mid-1990s.
I have worked closely with Cliff since I came to the CDFI Fund in 2007, and I have always found him to be a staunch advocate for the interests of community development credit unions and the community development industry. So thank you, Cliff, for your exceptional dedication to our nation's low-income communities. I know that all of us at the CDFI Fund will miss working with you, as, I am sure, will the staff of the Federation and the Federation's members. We offer our best wishes for your continued success in your new position as the Assistant Director of the Office of Financial Empowerment at the Consumer Financial Protection Bureau.
And to you, the members of the Federation, I say, keep moving forward. These are challenging times for the CDFI industry. We face many complex economic challenges as we continue to recover from the recession as we work in a political environment that is dynamic and uncertain.
But I know this: If we continue to work together, we will continue to succeed.
Indeed, if we continue to be guided by the outstanding examples of selfless service that Cliff Rosenthal and Annie Vamper and Phillip Conner and Helen Godfrey-Smith and all the recipients of the "Helping Hands" Award have set for us, we will meet the challenges that lie before us, and we will continue to build a better world.
Thank you.