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(EMAILWIRE.COM, April 02, 2009 ) Washington, DC - At this mid-point in our fiscal year, I recently reflected on the Director’s message I wrote last October in which I stated, “The role that CDFIs play in serving distressed communities is more important than ever.” That phrase is something I’ve echoed a lot over the last six months, to anyone and everyone who would listen, and at every opportunity I have had. Well, some were listening very carefully, because the new Administration has come to rely upon us like none other in our history. Recent actions demonstrate that the Administration views the the CDFI Fund’s programs as a key part of America’s economic recovery.
By now, you all know that for fiscal year (FY) 2010, the President has requested the doubling of our budget. This is a tremendous compliment for all of us at the CDFI Fund, but a greater compliment and recognition for the CDFIs working every day on the front lines of this economic crisis.
In addition to the budget increase, the American Recovery and Reinvestment Act of 2009 (the Recovery Act) provided $3 billion of New Markets Tax Credit (NMTC) allocation authority and appropriated an additional $100 million to the CDFI Fund to apply to our CDFI and NACA programs. This legislation clearly represents the AdministrationÂ’s confidence in our abilities.
In that October DirectorÂ’s message, I announced a new three-pronged strategy to address the challenges facing the financial institutions supported by the CDFI Fund:
Create an Advisory Board Subcommittee
Tap into the knowledge and experience of CDFIs
Enhance the CDFI FundÂ’s Public Messages
I am very pleased with the results from these efforts and believe that they are linked to our recent successes. When the financial crisis first began to unfold last fall, I had a conversation with Bill Bynum, Chairman of the CDFI FundÂ’s Community Development Advisory Board. We felt it necessary to take immediate action to explore how the CDFI Fund could respond to the crisis, and we agreed to form a new Advisory Board Subcommittee. Through this, we hoped to gain a better understanding of what the CDFI industry is experiencing during this economic downturn, and how we can best serve the industry and the communities we all serve.
The first action of the Subcommittee was to directly tap into the knowledge and experience of CDFIs. The response to our solicitation for written comments was overwhelming and it resulted in a substantive all-day meeting at the Treasury Department with industry leaders, CDFIs, and Community Development Entities (CDEs). Many recommendations were offered, including the use of legislative enhancements to increase the capacity of CDFIs. Excerpts from those written comments and from the Treasury meeting were shared with key Congressional leaders and highlighted the benefits of the CDFI Program and NMTC Program. So, part of the credit for the provisions in the Recovery Act goes to those of you who shared your knowledge and experience though this process. For your efforts, I thank you.
Recently, the Advisory Board approved a slate of important and ambitious recommendations developed by its Subcommittee and presented these recommendations to me as Director of the CDFI Fund. I can assure you that the CDFI Fund is moving on multiple fronts to accomplish many of these recommendations. For example, we have already begun the process of developing a comprehensive new training and outreach initiative. This initiative will include: specific support for the sustainability and emergence of rural CDFIs; specialized training to different types on financial institutions; implementation of best practices that provide resources to restructure troubled home or business loans; and to provide technical assistance for items such as portfolio management, risk assessment, and analyzing market opportunities. It is very important for us to identify the best practices that have worked for CDFIs and to replicate them across the industry.
The final item I outlined last fall was to enhance public messages by the CDFI Fund. For almost 12,000 of you now subscribed to the CDFI Fund’s “E-Updates,” a subscription email news service, you are well aware of our accomplishments toward this goal. At every possible opportunity, we have strived to keep you informed and share your successes with the public, ensuring that those within the new Administration, the Treasury Department and on Capitol Hill are well informed of the challenges you are facing and that the role you play in serving distressed communities is truly more important than ever.
Now, let me turn and look ahead to discuss the planned activities for the remainder of this fiscal year. Within the next 60 days, the CDFI Fund will announce $1.5 billion of NMTC allocations made available through the Recovery Act. Within the next 90 days, $98 million of Financial Assistance grants made available through the Recovery Act for the CDFI Program and Native American CDFI Assistance (NACA) Program will be awarded. And, before this year is over, approximately $55 million in additional grants will be awarded through the supplemental rounds of the CDFI and NACA Programs, and $5 billion of NMTC allocations though the calendar year 2009 round of the NMTC Program.
I am confident that the CDFI FundÂ’s operations can expeditiously administer these award rounds. Just last week, the Technical Assistance awards for the FY 2009 round of the CDFI Program were announced, five months earlier than the same announcement in FY 2008. I also want to note, that within the next two weeks all Technical Assistance awardees will be receiving their Assistance Agreements. The CDFI Fund will continue to strive for program enhancements and efficiencies.
In addition, the CDFI Fund is also preparing to start up new programs. The Capital Magnet Fund (CMF) was established through the Housing and Economic Recovery Act of 2008 (the Housing Act) but the funding that was expected to come from Fannie Mae and Freddie Mac has not come to fruition. Nonetheless, the CDFI Fund is moving quickly to stand up this critically needed program should funding be made available. We recently posted a request for public comment in the Federal Register encouraging the public to submit recommendations on how we might design, implement, and administer the CMF. I encourage all of you to let us know your thoughts about this important new program.
The Housing Act also called for the CDFI Fund to create the Financial Education and Counseling pilot grant program, offering financial education and counseling services to prospective homebuyers with a goal of increasing their financial knowledge and decision-making skills. The goals of the program are to encourage individuals to build personal savings, improve their credit scores, and lower their debt. The CDFI Fund is moving quickly to launch this new program in the coming months.
When I accepted this position back in November 2007, I did so with a strong desire to position the CDFI Fund for future growth. I am honored to be serving as your Director at the CDFI Fund. I’ve reflected throughout this message on what I wrote last October – so I will close this message as I did back then … We must all work together to meet the challenges before us, and I am confident that they will be overcome.
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