(November 19, 2008 – Washington, DC) The National Federation of Community Development Credit Unions (Federation) and its colleagues at the Community Development Financial Institutions (CDFI) Coalition have urged the federal government to set aside $1 billion of the $750 billion allocated under the Emergency Economic Recovery Act for capital infusions to CDFIs, including community development credit unions (CDCUs), to support increased lending and investment in low- and moderate-income communities.
The request came in the form of an appeal to Neel Kashkari, Assistant Secretary for Financial Stability at the Treasury Department’s Office of Financial Stability, and to Donna Gambrell, Director of the Treasury Department’s CDFI Fund, two key officials responsible for administering the Troubled Assets Relief Program (TARP). The letter was signed by the Board of Directors of the CDFI Coalition, which is the unified voice of a broad spectrum of CDFIs - financial institutions with a special mission of serving underserved communities and people of modest means.
CDFIs include CDCUs, housing funds, community loan funds, venture capital funds, community banks, and micro-enterprise lenders. They provide a range of affordable financial services and loans to consumers, homeowners, small businesses, and community organizations that finance affordable housing and community facilities. CDFIs specialize in making the types of loans that banks cannot or will not make, either because they lack presence in low-income communities or because borrowers do not conform to conventional underwriting criteria.
“Congress has expressed its concern that little of the first wave of TARP investments in banks seems to be finding its way to the communities and families most in need,” said Cliff Rosenthal, President and CEO of the Federation. “We in the CDFI movement believe that our institutions are uniquely positioned to aid some of the hardest-hit communities around America, and that moreover, we can leverage any federal funding many times over.”
CDFIs help low-income individuals build assets, manage debt, and obtain financing to become productive stakeholders in the economy, and they serve the people most often neglected by mainstream financial institutions; 70% of CDFI clients are low-income, 76% are minorities, and 58% are women.
“We are pleased that a number of community development banks have now gained access to the TARP program,” explained Cliff Rosenthal. “Speaking on behalf of our various constituencies, the directors of the CDFI Coalition want to ensure that CDCUs and other CDFIs also gain access to this important source of capital."
To view the CDFI Coalition's request letter, please click here.
To personalize your own letter of support, please click here.
© 2008 National Federation of Community Development Credit Unions.