(September 14, 2007 – Chicago, IL) Today, the National Federation of Community Development Credit Unions (Federation) and seven of its member community development credit union (CDCU) members learned that they will receive nearly $5.1 million in Financial Assistance (FA) Awards from the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. In addition to the CDCU awards, two other credit unions in Hawaii were also awarded nearly $200,000 in Technical Assistance (TA) Grants. The announcement was made in Chicago by U.S. Treasury Secretary Henry M. Paulson, Jr. and CDFI Fund Director Kimberly Reed.

The Fund announced just over $27.3 million in FA and TA in this new round of awards. The $5.3 million awarded to credit unions, 19.4 percent of the national total for 2007, is nearly $2 million more than last year when credit unions received approximately $3.4 million, or 12.6 percent of all 2006 awards.

“We are extremely pleased to see a larger portion of this year’s CDFI awards made to credit unions,” said Federation Executive Director Clifford N. Rosenthal. “We hear over and over from our members that their primary barrier to growth is access to capital.”

Rosenthal added that capital is particularly important for financial institutions serving low-income individuals and families. “Serving people of modest means is not only challenging, but it can be more costly than serving wealthier communities,” said Rosenthal. “Awards from the CDFI Fund have been indispensable for CDCUs and CDFIs to reach more people in need.”

The Federation’s own $600,000 FA award is intended primarily for secondary capital investments and Predatory Relief and Intervention Deposits (PRIDEs) in member CDCUs. PRIDE™ is a risk sharing deposit that can be used to collateralize loans made by credit unions to fight predatory or abusive lending. The Federation shares the risk on these loans by assuming the risk on 25 to 40 percent of the loan principal. Any losses to those loans are shared pro-rata between the credit union and the Federation. When PRIDE™ deposits mature, the credit union repays the Federation the original deposit amount minus the Federation’s share of losses realized on secured anti-predatory loans.

The Federation recently developed a new PRIDE product to help people living with disabilities purchase assistive technologies. A portion of the new grant will support this product.

“Since inception, the Federal CDFI Fund has been one of the most important sources of expansion capital for credit unions and other CDFIs serving low-income populations,” said Rosenthal. “It has literally built-up an entire industry devoted to providing affordable financing to people living in the margins of society. Many of the products and services CDFIs offer would simply not exist if it wasn’t for the CDFI Fund.”

New York on the Verge of Creating its own CDFI Fund

The Federation was a leader in getting the Federal CDFI Fund established in the mid-90s and has been advocating for a similar fund to be established in New York State ever since. For the past decade the Federation has staffed and operated the New York Coalition of CDFIs, which advocates on behalf of all CDFIs in the state.

After years of “one-house bills,” the NY Coalition of CDFIs’ work has finally paid off. This year, legislation was passed by both chambers of the State Legislature and signed into law by the governor, creating the framework for a full-fledged CDFI program in New York. Funding for the New York State CDFI Fund requires separate action, but the Coalition is working to have an initial appropriation of $5 million included in the Governor’s budget.

“New York State has 106 federally-certified CDFIs, one of the highest concentrations in the country,” said Rafael Morales, the Federation’s coordinator for the New York State CDFI Coalition. He said that the new state fund will help attract federal dollars as well as private sector funds to promote the work of CDFIs in New York. “The national CDFI Coalition estimates that every dollar of federal CDFI funding leverages twenty-seven dollars in non-federal monies,” said Morales. “Based on that figure, even a modest $5 million appropriation in New York will have a huge impact on the communities CDFIs serve.”

New York CDFIs received $2.75 million in CDFI funding this round, just over 10 percent of the total awards announced. The New York Coalition of CDFIs hopes that the state fund will complement the federal fund and bring even more capital to the Empire State.

For more information about the New York Coalition of CDFIs, please contact Rafael Morales, Coalition Coordinator and Public Affairs Officer at the Federation at rmorales@cdcu.coop, or (212) 809- 1850, x 206.