Introduction
Fred, thank you for the kind introduction. It's an honor to be a part of the CDFI Coalition's 2009 Institute, and to be speaking with you here today. I'd like to take a moment to thank Senator Dick Durbin, Chairman of the Senate Appropriations Subcommittee on Financial Services and General Government. Senator Durbin spearheaded the provision within the American Recovery and Reinvestment Act of 2009 that provides an additional $100 million for the CDFI Program. Additionally, I would like to thank Senators Max Baucus and Olympia Snowe, who were instrumental in outlining the New Markets Tax Credits portion of the bill.
Today I am going to talk about how changes in our political and economic landscape have impacted the CDFI Industry since our meeting last year, as well as how the CDFI industry has responded to our Nation's economic crisis.
I don't need to tell you how trying times have been economically, but I can assure you that the Treasury Department is moving swiftly to take action and improve our economic situation. The Secretary has worked quickly to implement a Financial Stability Plan that will restore confidence in the market and bring credit and capital back to consumers and businesses. On February 18th, President Obama unveiled a mortgage foreclosure plan, which will help millions of Americans refinance or modify their home mortgages in order to lower their monthly payments and prevent avoidable foreclosures.
Last Thursday, President Obama released his fiscal year 2010 budget titled A New Era of Responsibility - Renewing America's Promise. The President views the CDFI Fund and the programs we administer as a key part of his strategy to address the economic crisis. To that end, the President's request doubles the CDFI Fund's current budget.
The economic and political changes we have experienced since we met last year have significantly impacted the CDFI industry. Traditional lending enterprises have been unable to meet increased demand, putting CDFIs at the forefront of our industry. These changes have come at a time when the CDFI Industry has matured and flourished to the point that people in Washington and on Main Street have really noticed your good work.
Over the past year, we've seen a serious drop in lending origination within the mainstream community, which has caused the demand for CDFIs to skyrocket. Policy makers and business professionals will be looking to the CDFI industry for insight on how to revitalize and invest in communities most in need. This means continuing to lend with sound underwriting practices and homeownership counseling services. Banks and other enterprises can learn by your example that lending to low-income individuals is not only good for communities but is also good for the bottom line. Now is the time keep up your hard work, and stay ahead of the curve so that these same financial institutions continue to look to the CDFI Industry for ideas, expertise and best practices.
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 is perhaps the most tangible recognition of the good work that the CDFI Industry has done over the past few years. Congress has recognized the important work being done within the industry, by including provisions to fund the CDFI Program and increase New Markets Tax Credit authority in the economic stimulus legislation.
The Recovery Act will provide an additional $100 million to enhance the lending capacity of CDFIs in order to provide distressed communities with affordable financial services and products. The new legislation also contains an additional $3 billion of New Markets Tax Credit allocation authority that will be evenly divided between the 2008 and 2009 rounds of the program.
In addition to the extra funding for the CDFI Program, the Recovery Act also included language that waives the matching requirement on CDFI Program awards. We at the CDFI Fund recognized that challenges facing the philanthropic community and lending community have made it difficult for CDFIs to obtain the matching fund requirements. Congress also acknowledged this and waived the matching funds requirement for the stimulus funding to enable CDFIs to quickly make use of these funds.
This policy change will enable the Fund to distribute stimulus dollars quickly so that they can be utilized by CDFIs in a short period of time. Another important program change is that Congress waived the $5 million award cap over a three-year period that had previously been in place.
I would also like to recognize the CDFI Coalition for their aggressive work urging Congress to support the CDFI Fund's inclusion in the stimulus legislation. Your efforts and support letters have obviously had an impact, which will in turn enable us to better help our Nation's underserved communities.
The Community Development Advisory Board
Another way we are addressing the financial crisis is through the Community Development Advisory Board. When the financial crisis first began to unfold, I had a conversation with Bill Bynum, Chairman of the Community Development Advisory Board, in which we explored what could be done. We agreed to form a new Advisory Board Subcommittee with a mission to determine the impact of the crisis on the institutions that the CDFI Fund supports and the communities these institutions serve, and to offer policy and programmatic recommendations to increase that support.
To gather information from the industry, the Subcommittee requested written comment letters be submitted for consideration. I was impressed by the quantity and quality of these recommendation letters and would like to thank any of you present today for putting forward such substantive recommendations for evaluation and consideration.
The Subcommittee also convened at the Treasury Department in Washington for a full day summit with industry leaders. After a morning panel of industry experts, two panels representing the CDFI Coalition and the NMTC Coalition presented to the Subcommittee. The CDFI Coalition was a critical part of this process, assembling industry representatives from credit unions, community development banks, loan funds and venture capital firms to bring forward a perspective of views from the entire industry.
Following a series of conference calls to discuss the recommendations, the Subcommittee members returned to Washington for a full day meeting with CDFI Fund subject matter experts on the staff. The final step in this process will be the Subcommittee's presentation of the recommendations to the full Advisory Board for deliberation and approval, and then the presentation of the final recommendations to me as Director of the Fund during the full Community Development Advisory Board meeting that is scheduled for this Thursday via conference call.
I have been impressed by the level of commitment and enthusiasm from everyone involved in this process. As Director of the Fund, I certainly appreciate the time and commitment Subcommittee members have given to this important endeavor. Bill Bynum deserves special recognition for the wealth of knowledge and experience he demonstrated as Chair of the Advisory Board.
Closing
Now more than ever, CDFIs have a significant role in our Nation's economy. In 2009, I'd like to challenge each of you to discover new and innovative ways to become successful financial leaders. I believe that CDFIs have a significant role in helping this country once again get back on the path to economic prosperity.
Thank you.