Legislation would create state CDFI Fund
(June 27, 2006 – Albany, NY) Twelve years ago, in the wake of a massive wave of bank branch closings, the National Federation of Community Development Credit Unions (the Federation) began seeking legislation that would create a state entity to support credit unions as successor institutions in abandoned low-income areas. The Federation’s initiative gained force in the mid-1990s, after the creation of the federal Community Development Financial Institutions (CDFI) Fund: it was able to win a $1-million annual funding program through the Empire State Development Corporation. Funding was limited, however, to supporting lending to minority and women-owned small businesses.
“It’s a much needed area,” said Federation Executive Director Cliff Rosenthal, who conceived and promoted the program, “but it has not met the critical need of building institutional capacity and capital of community development credit unions (CDCUs) and other CDFIs.
As a result of legislative action, all that is on the verge of changing. After a decade or more of “one-house bills” – in this case, legislation that was passed by the State Assembly but went no where in the State Senate – a bill to establish a CDFI Fund has passed both houses. According to Federation consultant Cathie Mahon, the new fund “would provide financing for the full range of activities that a CDFI engages in. Lending for affordable housing and to fight predatory lending are crucial, high-profile needs in New York State, and we hope that the new CDFI Fund will make it possible to address these areas, as well.”
The campaign is not over yet, Mahon noted. The versions of the bill passed by the two houses must be reconciled, and the legislation must be signed by the governor. Moreover, the bill enables, but does not finance, the New York CDFI Fund. However, the Federation is optimistic, since the fight against predatory lending has made the case for a state CDFI Fund stronger than ever.
The New York State CDFI Coalition, started in the mid-1990s by the Federation and staffed by it ever since, has a Steering Committee that includes CDCUs (Alternatives FCU, Ithaca, NY; Lower East Side People’s FCU, New York, NY) and other CDFIs, including the Leviticus Fund (Yonkers, NY); Rural Opportunities, Inc. (Rochester, NY); the Capital District Community Loan Fund (Albany, NY); and the Community Capital Bank (Brooklyn, NY). Along with Ms. Mahon, the coalition’s persistent and effective lobbying of the state legislature has played a key role in securing this victory.