Keynote Speech of CDFI Fund Director Donna Gambrell at the National Federation of Community Development Credit Unions 34th Annual Conference for Serving the Underserved

June 13, 2008

The Director of the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund Donna J. Gambrell delivered a keynote address on June 13, 2008 at the National Federation of Community Development Credit Union's 34th Annual Conference on Serving the Underserved in Dallas, Texas. Community Development Credit Unions represent almost 20 percent of all certified CDFIs.

Full Text of Speech:

Thank you very much for that kind introduction, Cliff. I am delighted to be here today at the National Federation of Community Development Credit Unions' (the Federation) 34th Annual Conference on Serving the Underserved.

I began my tenure as Director at the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund in December of 2007. As you all may be aware, I was appointed by Secretary Paulson to serve a three-year term. I hope to bring stability between changes of Administration, and to both develop and implement new strategic initiatives that will position the CDFI Fund and its programs for future growth.

Before beginning as Director, I served as Deputy Director of Consumer Protection and Community Affairs at the Federal Deposit Insurance Corporation (FDIC). Most recently I spent 18 months serving for former FDIC Chairman Donald Powell on the Gulf Coast rebuilding efforts. I was onsite in Louisiana and Mississippi spearheading partnerships among financial institutions, government agencies and community-based organizations to promote community and economic development.

The importance of strong partnerships needed to succeed in community development efforts cannot be underestimated. The CDFI Fund would like to thank all of the community development credit unions (CDCUs) and the Federation for their continued support and interest in reaching out to communities and educating them about the CDFI Fund’s programs. Without partners such as Federation and its members, we would not have the same impact.

Last month I had the opportunity to see this impact firsthand, as I was joined by Congresswoman Velazquez, chair of the U.S. House of Representatives Small Business Committee, and Congressman Edolphus Towns at Brooklyn Cooperative Federal Credit Union’s first branch office opening in the Bedford-Stuyvesant neighborhood of Brooklyn, New York. Brooklyn Cooperative FCU has been a certified CDFI since May 2001, and has received both technical and financial assistance awards from the CDFI Fund. This branch opening, a tremendously important development for the neighborhood, truly exemplifies the mission of the CDFI Fund. Awards made through the CDFI Program helped Brooklyn Cooperative FCU grow its capital base and lending capacity, and hire the staff needed to expand the reach of its financial products and services to now include the highly distressed community of the Bedford-Stuyvesant neighborhood.

CDFI Program & Current Award Round

If you are new to the CDFI Fund and our programs, let me start out by saying that the CDFI Fund does not directly fund individuals or projects. The CDFI Fund's purpose is to expand the capacity of CDFIs so they are better able to provide credit, capital, and financial services to underserved populations and economically distressed communities across the entire United States. CDFIs use our financial assistance awards to engage in a wide range of community economic development activities. These investments include small business lending, affordable home mortgage products, financial education, and home ownership counseling; they are also used to develop innovative solutions to meet the needs in awardees' communities.

Credit unions are an important part of the CDFI community - they make up approximately 18 percent of our over 800 certified CDFIs, which is the second largest industry sector after loan funds. In 2007 we certified 16 credit unions as new CDFIs, more than double the number certified in 2006. Those 16 represented 38 percent of all CDFI certifications that year, second only to loan funds at 47 percent. This year we have already certified three additional credit unions in the first quarter – they are East End Baptist Tabernacle Federal Credit Union; Kunia Federal Credit Union; and Workers United Federal Credit Union. Credit Unions are on the move.

Under the CDFI Program, applicants can apply for financial assistance only, technical assistance only, or a combination of both financial assistance and technical assistance through a single application. The CDFI Fund provides financial assistance awards in the form of equity investments, loans, deposits, or grants, depending on applicant needs, and must be matched dollar-for-dollar by the applicant with funds of the same type from non-federal sources.

In the case of credit unions, they can also use their retained earnings as a match but must show an increase in membership shares from one period to another. Financial assistance awards enable CDFIs to leverage private capital to respond to demand for affordable financial products and services in their respective communities.

If you are not ready to apply for financial assistance, our technical assistance funding may be of benefit as you consider becoming a certified CDFI. Organizations working toward CDFI certification are permitted to apply for technical assistance grants from the CDFI Fund that can help an organization on it's path to certification.

The Fund sought public comments on its CDFI certification criteria earlier this spring. I’d like to thank the Federation which provided a detailed comment letter representing the interests of community development credit unions. We will be taking those comments into consideration as we develop updated certification policies later this year.

We recently identified another way to serve you better. The Fund has launched an email subscription service called CDFI Updates. CDFI Updates is designed to keep you informed of the news you are most interested in at the Fund. This new service enables you to receive e-mail updates related to a variety of specific topics that you may choose from.

Subscription items include a range from new press releases, to updates regarding any of our programs such as the opening of a new round or an update to a Frequently Asked Questions document, to publications like our research, upcoming events or even our current career opportunities for those of you interested in joining our team!

If you are already signed up for this service you will have seen our recent publication of a revised certification application on which we are soliciting public comments. The Office of Management and Budget (OMB) requires that we circulate our applications for comment every three years. We will use any comments you provide in our planned effort to create a web-based electronic application for both CDFI and CDE certification. If you have not yet subscribed to this service I encourage all of you to visit the CDFI Fund's homepage and click the CDFI Updates icon to do so.

I also encourage you to not stop with our subscription service, but to tap into another valuable pool of information – each other. Industry conferences like this provide a unique opportunity to listen to leaders in the field speak about best practices and lessons learned. On a more informal level, it offers an opportunity for you to speak with your fellow CDFIs from different towns, cities and states to discover what types of innovations they are bringing to those typically underserved by traditional financial institutions. Though you represent a geographically diverse area, there are shared challenges and lessons common to all of you. I am constantly impressed by the passion and creativity our CDFIs bring to their customers. So I encourage you to partner with your colleagues at the conference and share the stories of your successes and challenges.

This is currently an exciting growth period for the CDFI Fund. Our fiscal year 2008 appropriations increased to $94 million, roughly double the programmatic funding received last year. This summer the CDFI Fund will announce that approximately $80 million in awards through our three monetary programs, and $3.5 billion in tax credit authority will be awarded through the New Market Tax Credit (NMTC) Program. With the increased funding, there is a balance to ensuring that more entities receive awards and that larger awards are made while still ensuring that the awards will be best used to serve distressed communities across the whole of the nation.

One of my goals as Director is to expand the reach of existing certified CDFIs, as well as increase the total number of certified CDFIs. To those of you who are not certified CDFIs, we would like you to have the capacity to do more of what you do, and I encourage you to examine if CDFI certification and our funding programs could be beneficial to you. To learn more today, CDFI Fund staff are conducting a workshop during the session following this plenary. Also, CDFI Fund staff are operating an exhibitor booth during the conference, so if you haven’t stopped by our booth yet, please do, the staff will be happy assist and answer all of your questions. I encourage all of you to seek CDFI certification and to apply to our programs.

Highlighting Best Practices

Credit unions have been at the forefront of providing many innovative financial products and are proven, low-cost alternatives to payday and predatory lenders. Innovative products offered by credit unions include such things as credit building loans, small loans with an automatic savings feature, and first chance accounts, in addition to many others. Many CDCUs developed best practices and I want to encourage all of you to please share these among each other and with the CDFI Fund.

The CDFI Fund captures a wealth of statistics, but the numbers often don’t tell the stories of what’s happening on the ground and in your communities. Your input and best practices are invaluable and I would like all of you to share those with the CDFI Fund. Examples of your organizations best practices and stories may be highlighted in the CDFI Fund’s annual report, newsletters, speeches, and on our website. To share such information all you have to do is visit the CDFI Fund’s homepage (www.cdfifund.gov) and click on "Submit a Project Profile."

With that said, I want to highlight a few Federation members and CDFI Fund awardees:

1. Alternatives Federal Credit Union (Alternatives) has been dedicated to creating economic opportunity for underserved people and communities. Alternatives offers financial services, financial education, and economic development programs to its 8,500 members and residents who live in Ithaca, Tompkins County and adjacent counties. Alternatives plays a key role in assisting its low-income members to build wealth and move along the continuum of asset development.

Alternative's programs, such as "The Credit Path" and "Achieving the Dream," include financial education and counseling services to provide low-income, first time home buyers with successful opportunities to own a home. Alternatives serves one of the counties with the lowest foreclosure rates in the country by offering non-predatory mortgages that are paired with financial education to perspective homebuyers.

2. ASI Federal Credit Union (ASI) is a low-income designated credit union that serves approximately 77,000 members. Over 60 percent of ASI's members fall below the poverty level, and an estimated 10 percent were unbanked prior to joining the ASI. ASI's target market consists of rural and minor-urban areas throughout southeast Louisiana, including New Orleans. ASI provides affordable financial products and services including alternatives to predatory lending. ASI has five main products including the Stretch Plan, the Credit Enhancement Plan, the Asset Builder Loan, the Yours-to-Own Loan, and the Payday Lender ReBuilder Loan. ASI is also working with the NFCDCU to provide a refinancing product to those facing foreclosure in Southeastern Louisiana.

3. Saguache Credit Union (SCCU), located in Moffat, CO, provides financial services and products to three counties in southern Colorado. The communities SCCU serves suffer from significant economic distress with over 26 percent of the population living at or below poverty level. In addition, the communities that SCCU serves lack access to basic financial services, and many residents travel as much as 100 miles round trip to access the nearest financial institution. SCCU provides basic financial services including checking and savings accounts, wire transfers, money orders, home ownership and consumer loans.

4. Founded in 2000, Latino Community Credit Union (LCCU) is a community-based, 50,000 member financial institution. The credit union operates five branches and provides services throughout the state. Latino immigrants, make up over 85 percent of LCCU's membership. LCCU has received multiple awards from the CDFI Fund to increase its capacity to offer financial services, access to loans, financial independence and financial education to the North Carolina Latino community and other low-income people.

LCCU developed a comprehensive financial education curriculum, called Building a Better Future, available in both English and Spanish. The financial education is provided through twice weekly classes in each branch, one-on-one member counseling and free credit counseling over the telephone.

Closing

As Director, I will strive to best position the CDFI Fund and its programs for future growth. We have already begun to take action to ensure that our existing programs are most efficiently and effectively managed. Now is the right time to focus on and improve upon how we achieve our primary mission and in doing so we will continue to work with our partners such as the Federation.

I hope that all of you will look at the CDFI Fund’s programs as a way in which you can increase your organization’s capacity to support the economic and community development in your communities. Thank you for everything that you do to support us and as Director I look forward to working with you as we carry out the mission of the CDFI Fund to bring financial services and products to the underserved in distressed communities across our nation.

Thank you.

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