Lt. Governor Duffy Tells NY CDFIs: Your Input Needed in Regional Economic Development Councils

(May 23, 2011 – New York, NY) Community development financial institutions (CDFIs) from across New York State came together May 16 and 17 in Albany, New York for the 2011 New York Coalition of CDFIs Statewide Conference, organized by the National Federation of Community Development Credit Unions (Federation), the longtime sponsor and founder of the Coalition. With more than 100 representatives from non-profit loan funds, community development credit unions (CDCUs), community development banks, community development microfinance funds, and community development teams from several major banks, this year’s conference was the largest to date, with attendees eager to hear from state and federal officials and to discuss the economic challenges facing low-income communities.

New York State Lieutenant Governor Robert Duffy, speaking at this year’s NY Coalition of CDFIs Statewide Conference.

Among the agencies represented at the conference were Empire State Development Corporation (ESDC) and the Federal Home Loan Bank of New York (FHLB).  Attendees also heard from experts in the fields of microfinance, affordable housing development, consumer protection, asset building, homeownership and foreclosure prevention, and primary care and non-profit facilities development. A keynote address by Lieutenant Governor Robert Duffy, was a highlight for many in attendance.

Stating that “the work that CDFIs do for communities that are underserved is critically important,” Lieutenant Governor Robert Duffy commended CDFIs for their vital work providing low- and moderate-income New Yorkers with access to affordable financial services and for their leadership in expanding responsible credit to communities in need.

Citing Governor Cuomo’s January announcement to create a series of regional economic development councils, which will work with state agencies to help allocate economic development resources where they are most needed, Duffy reiterated the Administration’s commitment to ensuring that “those who have been challenged most by the economy” be reached.  In his remarks the Lieutenant Governor alluded to the Administration’s desire to work closely with folks in the room, since “nobody has a better sense of what is happening on the street than CDFIs.”  He reassured to those assembled that “it is [the administration’s] intention to include CDFIs [in the Regional Economic Development process]…” in order that they “tell us what we should be doing [to support their efforts].”

(Left to Right) Lt. Governor Duffy, CDFI Coalition Coordinator Melanie Stern, and Pathstone Senior Director for Economic Development Dana Brunett.

Lieutenant Governor Duffy is charged with leading these councils, and CDFI practitioners in attendance were hopeful that CDFIs would have a seat at the table. According to Dana Brunett, Senior Director for Economic Development at PathStone, a CDFI based in Rochester, “it is imperative that those of us with an ear to the ground, who really understand the economic needs of the communities we serve, be included in these councils,” he said.

Melanie Stern, Coordinator of the New York Coalition of CDFIs and Senior Program Officer at the Federation, was also encouraged by the Lieutenant Governor’s remarks. “The Federation has been supporting the work of this coalition for more than a decade, and while we have had major successes, each transition in government, be it at the gubernatorial, Senate or Assembly level, brings new challenges to our efforts,” she explained. “The fact that the New York State economy is still struggling makes it even more difficult to advocate for funding of CDFI programs, but we are fortunate that many of our current leaders in Albany understand the important impact CDFIs are making at the local level.”

According to Stern, “one of the Coalition’s main goals is to see that a direct allocation for the New York State CDFI Fund included in next year’s budget. CDFIs are experts at leveraging public monies with private funds, and the according to U.S. Department of the Treasury estimate, a $15 million investment from New York State would create as much as $150 million in direct investments in hard-hit communities,” she said. “Our hope is that with adequate support, the New York State CDFI Fund will bring a renewed emphasis for economic development in low-and moderate-income and rural communities across the state.”

Another key priority for the Coalition is keeping payday lending out of the New York State. Stern noted that the so-called “check cashers bill” that was introduced in both chambers of the legislature and voted out of the Senate Banking Committee, would open the door to predatory payday- like loans in New York by allowing check cashers to make small dollar short term loans that bypass state’s usury cap. “This bill has been promoted as a boon to low-income communities when in fact it will insure that individuals get caught in the difficult cycle of high cost borrowing. With millions of New Yorkers struggling to make ends meet, these loans are a trap that many simply can’t afford to fall into,” she added.

Federal Funds Critical to New York State CDFIs

Conference attendees also heard from Clifford N. Rosenthal, Federation President/CEO and board member of the national CDFI Coalition, about threats to the U.S. Department of the Treasury CDFI Fund, which has provided over $117 million to New York CDFIs since inception. According to Rosenthal, “CDFIs received unprecedented levels of funding and support in 2010 for asset building, savings, entrepreneurship and microenterprise programs, but most importantly recognition that CDFIs an integral part of the solution to the country’s economic woes and the critical role the play in stimulating the nation’s economic growth. Now that funding is being threatened.”

New York State has the largest concentration of CDFIs in the country, with over 110 community development credit unions, loan funds, community development banks, and affordable housing agencies ranging from multi-million dollar financial intermediaries to small microenterprise loans funds.  These CDFIs have experienced a huge surge in demand for small business loans, mortgages, and personal loans as the economy has deteriorated, and they have responded to this demand with mortgages that match a client’s ability to pay, anti-predatory personal loans and micro-financing for start-up and other small businesses. But without continued support at the state and federal level, CDFIs may not be able to meet the demand.

The New York Coalition of CDFIs Statewide Conference was made possible thanks to major sponsorship from Capital One Bank, JP Morgan Chase, Citibank, The Federal Home Loan Bank of New York, Deutsche Bank and the Credit Union Association of New York.  The New York Coalition of CDFIs is a program of the National Federation of Community Development Credit Unions. Presentations from the conference will be made available on the Coalition's website at: http://www.nystatecdfi.org.

For more information on the New York Coalition of CDFIs, please contact Melanie Stern, Coordinator of the Coalition Coalition at mstern@cdcu.coop or (212)809-1850 x211.

© 2011 National Federation of Community Development Credit Unions.