Introduction
Thank you, Mark, for that kind introduction. It is a pleasure to be here today. And I am genuinely honored to have the opportunity to join you in celebrating the 25th anniversary of Opportunity Finance Network's annual conference.
Over the past two decades, OFN and its more than 170 member organizations have helped to transform a budding opportunity finance movement into a thriving industry. On behalf of everyone at the CDFI Fund, I would like to thank all of you for your hard work and commitment to serving low-income people and communities across the nation. And I offer our best wishes for your continued success over the next 25 years.
At the CDFI Fund, we are celebrating an anniversary of our own this year. Fifteen years ago, on September 23, 1994, Congress created the CDFI Fund to promote economic revitalization and community development in our nation's underserved communities.
Since then, we have helped to build a nationwide network of more than 800 CDFIs and have awarded over $1.2 billion to CDFIs, community development organizations, and financial institutions through our CDFI Program, Native Initiatives, and Bank Enterprise Award Program. In addition we have now awarded $21 billion in allocation authority through the New Markets Tax Credit Program. We share with OFN and its members a vision of an America in which all people have access to affordable credit, capital, and financial services, and we look forward to continuing to work with you to make that vision a reality.
New opportunity in the New Normal
The theme that OFN has chosen for this year's conference is The New Normal, and I must say, I admire the spirit behind those three words.
As we all well know, the nation's economic crisis has presented extraordinary challenges over the past 12 months. We are indeed living and working in a new environment.
But the fact that OFN and its members have chosen to accept this environment as normal - as something not simply to endure but to face head on, to understand, and to navigate as skillfully and effectively as possible - speaks volumes about this industry's resilience, your commitment, and your creativity. You are setting a wonderful example for everyone in the CDFI industry.
Today I would like to offer a few thoughts of my own on The New Normal. I do not want to minimize the challenges confronting the CDFI industry in the wake of the economic downturn, but I am certain that there is another side to the story, a very positive one. Indeed, I can assure you that, despite the very real challenges it presents, the New Normal also offers very real opportunities for CDFIs to expand their impact in the communities they serve.
Ironically, these new opportunities have been born from the economic downturn itself. Over the past year and a half, there has been a serious decline in lending originations within the mainstream community. With traditional lenders unable to meet the demand, CDFIs have stepped forward, offering their ideas and best practices, and demonstrating that lending to low-income people can be good for the community and for the bottom line.
The role of CDFIs was given an even greater boost by the arrival of the new Administration in January. President Obama views the CDFI industry as a key part of his strategy to address the economic crisis, and Congress and the Administration have taken major steps to expand our mission and impact.
The first of these steps was the passage of the American Recovery and Reinvestment Act on February 17, 2009. The Recovery Act provided the CDFI Fund extra funding - $100 million beyond our annual appropriation for fiscal year 2009 - to enhance the lending capacity of CDFIs. $90 million of this amount was designated for our CDFI Program, $8 million for our Native Initiatives, and the final $2 million for administrative expenses. The new legislation also contained an additional $3 billion of New Markets Tax Credit allocation authority that is being evenly divided between the 2008 and 2009 rounds of the program.
In addition to providing extra funding, the Recovery Act also waived the matching funds requirement for all applicants in 2009. At the CDFI Fund, we realized that, as the philanthropic and lending communities tightened their belts, many recipients of our CDFI Program awards were finding it more difficult to meet their matching requirements. By waiving those requirement for awards made through the Recovery Act, Congress has enabled CDFIs to put federal funds to work in their communities much more quickly.
On February 26, 2009, the new Administration took a second important step to support CDFIs when it released President Obama's budget for the 2010 fiscal year. Entitled A New Era of Responsibility - Renewing America's Promise, the new budget raises the CDFI Fund's current budget of $107 million for 2009 to $243.6 million for 2010 - an increase of 127 percent.
The 2010 budget also provides $113.6 million - a 90 percent increase - for the CDFI Program, and $80 million for the Capital Magnet Fund, a new program to increase capital investment for affordable housing for low-income families.
President Obama's budget is also the first Administration budget to specifically include funding - $10 million - for the CDFI Fund's Native Initiatives, which assist Native American, Alaskan Native, and Native Hawaiian communities to overcome certain barriers to financial services.
Finally, just last week, on October 21, the President took a third important step, announcing a series of new initiatives to help small businesses access credit and create jobs. The Administration had already launched several initiatives to restore the flow of credit to small businesses, and these have been quite effective.
Still, the Administration recognizes that much work remains to be done, and so it has designed these new initiatives to provide even more support for America's small businesses. One initiative in particular will provide lower-cost capital to CDFIs that lend to small businesses in rural and urban areas hardest hit by the recession. Capital will be available at a rate of 2 percent for up to eight years, and CDFI banks, thrifts, credit unions will be eligible to apply.
In addition, the Administration will actively explore ways to increase access to liquidity for CDFI loan funds. I want to assure you that Treasury is very committed to actively exploring all ways in which CDFI loan funds might receive assistance in increasing liquidity for their lending activities. The discussions are ongoing, and I'm confident that we are making progress.
These three steps - the Recovery Act, the President's 2010 budget, and the new small business lending initiatives - represent an acknowledgment by Congress and the Obama Administration of the CDFI industry's role in promoting economic revitalization in the most underserved communities across our nation. And they are helping to create a new world of opportunity - both for CDFIs and for the communities they serve.
I believe that's a New Normal that we can all get used to.
CDFI Fund accomplishments
At the CDFI Fund, we have been mindful of both the tremendous opportunity and the tremendous responsibility that we have been given in the midst of the economic crisis, and we have been committed to moving as quickly and effectively as possible to implement the new Administration's agenda.
Just four and a half months after the enactment of the Recovery Act in February, we announced the financial assistance awards through the Recovery Act to 59 CDFIs and to 10 Native CDFIs. Just two months later - in record time - we disbursed all $98 million to these CDFIs. Today, 100 percent of the funds awarded to CDFIs through the Recovery Act has been disbursed, and the money is hard at work, helping to generate capital for small businesses, mortgage loans for homebuyers, and funding for affordable housing projects and other community facilities.
In addition to disbursing the Recovery Act awards, we solicited and reviewed more than 200 new applications submitted under supplemental rounds of our CDFI and Native American CDFI Assistance (NACA) programs. On September 28, we announced $4.4 million in financial assistance awards to 10 CDFIs through the NACA Program. And on October 2, we announced additional awards totaling $52.7 million to 62 organizations through our CDFI Program. Award closings and disbursements are already underway.
We also made awards under our Bank Enterprise Program. On August 20, the we announced awards totaling over $22 million for 55 depository institutions serving economically distressed communities. Collectively these 55 awardees increased their loans and investments in distressed communities by $214.2 million, their loans, deposits, and technical assistance to CDFIs by $74.6 million, and their provision of financial services in distressed communities by $3.5 million.
We also re-opened the 2008 New Markets Tax Credit Program application round to award an additional $1.5 billion of Recovery Act allocation authority within 100 days of enactment, and closed all of the award agreements within 30 days of the award announcement. We will announce an additional $5 billion in New Markets Tax Credits awards for the 2009 round tomorrow.
But awarding funds is not the only way we have been helping to address the economic crisis. Last fall, as the crisis deepened, I spoke with Bill Bynum, Chairman of the Community Development Advisory Board, to explore how the CDFI Fund could respond. We agreed to form a new Advisory Board Subcommittee to determine the impact of the crisis on the institutions that the CDFI Fund supports and to offer policy recommendations to increase that support.
After gathering information from a broad spectrum of the CDFI industry, the Subcommittee formulated a wide range of policy recommendations and on March 5, 2009, presented them to the full Advisory Board and the CDFI Fund.
I am pleased to report that the CDFI Fund has made significant progress implementing the Subcommittee's recommendations. For example:
- In July we created a new Office of Training and Outreach that will focus on expanding training and outreach by coordinating activities with government and non-governmental organizations interested in improving conditions in low-income communities.
- In August we launched a new Capacity-Building Initiative that will make new, specialized technical assistance and training available to CDFIs nationwide, enabling them to expand their lending activities and to spur economic growth in the communities they serve.
- As I mentioned, we also succeeded in securing direct funding - $80 million - for the Capital Magnet Fund in the President's 2010 budget. The Capital Magnet Fund will provide grants to CDFIs and qualified nonprofit housing organizations to finance affordable housing and related community development projects, and we are now in the process of developing the program, with plans to implement it in FY 2010.
These are just a few examples of some of the Subcommittee's recommendations that the CDFI Fund has already begun to implement. You will find much more information about our progress on our Web site.
There is one more recent initiatives that I would like to mention.On October 13th, we launched a new Financial Education and Counseling Pilot Program that will provides support for a wide range of financial education and counseling services to prospective homebuyers, and will address critical financial literacy needs in the wake of the crisis in the housing market. Under this new program, the CDFI Fund will make awards to organizations that provide financial education and counseling to prospective homebuyers. The deadline for applications is November 19.
We are very proud of the role that the CDFI Fund has been called upon to play in helping to revitalize our nation's economy. And we are pleased that our efforts - in particular, our efforts to implement the President's Recovery Act agenda - have not gone unnoticed. Upon release of our implementation plan, Vice President Biden commented, I commend Secretary Geithner and the Treasury Department for moving quickly to implement these innovative programs to help underserved communities. They are exactly what the President and I had in mind when we put forth the American Recovery and Reinvestment Act."
Going forward - together
Despite all the new opportunities that The New Normal has generated for CDFIs, despite all the progress that the CDFI industry has made, we must remember that many challenges still remain.
And while the CDFI Fund is committed to doing our part to advance the economic recovery, we recognize that we can't fulfill every need. We recognize that, unfortunately, even with the increased appropriations, we won't be able to provide an award to every highly qualified organization. But what we can do - and will do - is to begin developing and implementing new strategies that will include joining forces with our federal partners to determine how we can revitalize entire regions, not just blocks, and not just neighborhoods. It will not be easy - but doing community and economic development work has never been easy.
The road to economic recovery will be long. But as I look down that road, I find that there is one thing that gives me hope, one thing that always inspires me, and that is your extraordinary commitment to the communities you serve.
I have seen the impact of your commitment so many times in the past few months as I have visited communities around the country.
I have seen it in New Orleans, where the Housing Resource Center Network is helping the residents of Orleans Parish get back into their homes.
I have seen it in Los Angeles, at the grand opening of the Ánimo Watts Charter High School, an innovative college-preparatory charter school located in a neighborhood where such signs of hope are desperately needed.
And I have seen it on the Pine Ridge Reservation, and in Native communities across the nation, where Native CDFIs are flourishing, Native businesses are emerging, and Native people are becoming stronger and more self-reliant every day.
I thank each of you for your commitment to the communities you serve. I know that, by attending this conference, you have acquired an abundance of knowledge and skill that will enable you to act upon that commitment in new and innovative ways.
And, as you travel the road before you, I encourage you to remember that the CDFI Fund is a partner that you can count on every step of the way.
So let us travel this road together. Now more than ever, let us work together to fulfill our shared mission.
Let us work together to ensure that opportunity and prosperity are not the story of a select few but the provision of all Americans.
Thank you. Good luck and best wishes for 25 more years of exceptional service.
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