FROM THE OFFICE OF PUBLIC AFFAIRS

It is a pleasure to speak with you today. You are valuable partners in one of our highest priorities in the Clinton Administration: fostering growth in economically distressed communities. I have long thought -- and I know President Clinton shares this belief -- that this is an issue of vital importance to all of us -- no matter where we live or what our incomes may be. It is a fundamental national economic issue, because our country will never reach its full economic potential, unless we deal with the problems of the inner city and other economically distressed communities. Just think of the difference it would make in terms of increasing productivity and standards of living while reducing the costs connected with social problems if we can bring all Americans into the economic mainstream.

And now, at a time when we are enjoying the best economic conditions in our country in a generation, it is critical that we focus on this critical challenge.

I believe that with sufficient will we can succeed. The key is to identify strategies that work and replicate them in sufficient scale on a sustained basis around the country. Our strategy involves a three-pronged approach:

The first is strengthening public safety. In addition to the human costs, high crime rates are a significant barrier to economic activity. The President has made this a high priority through the Brady Bill, the assault weapons ban, both of which Treasury is deeply involved in, and his program to put 100,000 police on the streets.

Second, is investing in people, through education and training, from pre-school to adults, through improving the "job readiness" of the least advantaged and connecting them to the workforce. At Treasury we are deeply involved in these issues in the development and advocacy of the President's budget.

Third is increasing access to private sector capital, and other measures to create economic activity in the inner cities and other areas. Despite the fact that financial markets in the United States are today the most innovative, the broadest, and deepest in the world, we still have a severe shortage of financial institutions and of access to credit to create housing and jobs in the inner city and in rural communities. At Treasury, we have been involved in bringing our broad expertise to bear on these issues.

Over the last five years, in part because of our efforts to strengthen the Community Reinvestment Act, private sector lending in distressed areas has increased enormously. In 1996 alone, large commercial banks made $18 billion in community development loans -- funds used to produce affordable housing, finance small business, and develop retail and commercial revitalization projects. In the last four years, national banks have invested four times as much in community development as they did in the previous thirty years.

Promoting micro-enterprise is another key component of our strategy. This is an approach that the First Lady has tirelessly supported both here and abroad. Internationally, micro-enterprise has proven effective in developing countries in bringing the poorest segments of society into the economic mainstream -- something I have seen very clearly in my travels as Treasury Secretary to developing countries. For example, in the Philippines, I met a woman who had used a micro-enterprise loan to buy a mini-van to use as a taxi. Her family was now prospering as a result. This summer I will visit Africa for the first time and I plan to take a look at how micro-enterprises are being created there.

Here in the United States, we have learned from these examples and adapted them for our own market. Both at home and abroad, it is clear that, in order to be effective, access to capital is not enough -- it must be combined with training, education and technical assistance. That combination has been central to our approach at Treasury's CDFI Fund.

The CDFI Fund is key to the Administration's strategy of promoting micro-enterprise in the United States. The Fund has provided over $3 million to micro-enterprise organizations, and helped countless more to support micro loans. The Fund also has provided technical assistance to organizations and has just launched a special round focused on the technical assistance needs of the field.

The CDFI Fund not only provides technical and financial assistance but also focuses attention on micro-enterprise through the Presidential Awards for Micro-Enterprise Development. These awards go to a diverse set of institutions. For example, last year, in the first round of awards announced by the President and the First Lady at a White House ceremony, the Nebraska Microenterprise Partnership won an award for its comprehensive funding and technical support of the state's microenterprise industry. The Awards help highlight the success of individuals like Veronica Hargrove-Brown, a single mother who started a home-based child care business in her neighborhood in San Diego with support from a small loan from ACCION San Diego, a Presidential Awardee. I am pleased to announce today the launch of the second round of Awards, which will be awarded later this year. I hope you all will participate.

With CDFI, we have a vision that makes sense, a program that is up and running, and money that has begun to flow to communities and make a difference in people's lives. That is why it is critical that Congress now reauthorize the Fund and provide secure, stable and adequate funding going forward so that communities across the country can continue to benefit from the Fund's work. Reauthorization and obtaining the President's request of $125 million for CDFI are top priorities of the Administration.

Let me conclude by thanking all of you for your hard work in promoting economic opportunity in distressed areas. I applaud AEO's new goal -- to assist one million low income individual to achieve self-sufficiency by self employment by the year 2008. Achieving goals such as that is a very good investment in the long-term economic well being of not only the people who you are reaching directly, but all of us. I look forward to working with you in the days and weeks ahead as we continue to address this critical challenge. Thank you very much.