FROM THE OFFICE OF PUBLIC AFFAIRS

Treasury Secretary Robert Rubin and First Lady Hillary Clinton Thursday announced details of a Presidential Award program to recognize five aspects of micro-lending initiatives in the United States that broaden access to credit to lower-income Americans.

Created within the Treasury Department at the direction of President Clinton, the awards program will honor undertakings that offer not only access to credit, but technical assistance and training to micro-entrepreneurs. Awards will be presented for the first time this fall.

"This nation will fall far short of its full economic potential for all Americans unless our cities and distressed rural areas are healthy," Rubin said in remarks prepared for a video to the Association for Enterprise Opportunity where the award details were announced. "By helping poor people in the United States enter the economic mainstream, we reduce the social costs of poverty, increase national productivity, and improve social conditions for all of us. ... We don't have a monopoly on good ideas in the United States. This works overseas, and if adapted to our own economy, it can work in America."

Mrs. Clinton, who has encouraged micro-enterprise lending in the United States and abroad as a development vehicle, added, "Whether it is for a milk cow in Bangladesh or a computer in Chicago, women and men need help, encouragement -- and credit -- to make that first investment. Here in the United States, we are working to build up a micro-enterprise network."

Rubin said awards will recognize outstanding and innovative programs that provide access to credit, technical help and training. Four categories of awards to development organizations will highlight excellence in program innovation, access to credit, development of entrepreneurial skills, and poverty alleviation. A fifth category will reward private sector, foundation and governmental support for these micro-development organizations.

Microlending -- small loans, often just a few hundred dollars to budding entreprenuers -- is centered in community-based banks, credit unions, community loan funds and other local institutions. Interest rates are generally comparable to commercial lending rates and loan repayment rates often exceed those in the commecial sector.

FOR IMMEDIATE RELEASE
May 2, 1996

Thank you, Mrs. Clinton, and thank you for lending your thinking and support to the simple but important idea of using capital and capitalism to fight poverty and deprivation, here and around the world. You have been a champion of microenterprise development, and your involvement will help provide momentum to a program with a potential for a substantial impact on poverty both in the United States and in developing nations around the world.

One of the objectives of economic policy must be to bring the free market system to bear on the problems of poverty both here and abroad. This is in the self-interest of all Americans.

By helping poor people in the United States enter the economic mainstream, we reduce the social costs of poverty, increase national productivity, and improve social conditions for all of us. By helping poor people abroad, we create new markets for American exports and increase stability, thereby enhancing our national security. Helping the poor is clearly in the interest of the poor, but it is equally clearly in the interest of all Americans, no matter where they live or what their economic status may be.

That takes investment in education, in training, in skills. Toward these ends, the President has expanded Head Start and has helped our nation's schools better prepare our children for the 21st century. He has expanded the Earned Income Tax Credit to help families choose work over welfare and to make work pay.

And as you will be discussing here today, that requires expanding capital access, an important part of helping to reduce poverty in neighborhoods throughout the world. I saw it working in Manila at a micro-project underwritten by the Asian Development Bank. There, people in a poor neighborhood who couldn't possibly get capital in traditional channels are borrowing to start very small businesses. Moreover, the loans are profitable and the repayment rate is very high. This is micro-lending putting people to work.

We don't have a monopoly on good ideas in the United States. This works overseas, and if adapted to our own economy, it can work in America to help people in distressed communities better their lives and join the American economic mainstream.

In fact, as you well know, micro-enterprise development has begun in earnest here in the United States. I have met people involved in these programs and the results are encouraging. But we must expand the scale, and at the same time combine the availability of capital with technical assistance and training for borrowers. Again, a lesson to be learned from observing programs abroad.

Micro-enterprise lending is just one example of President Clinton's commitment to increasing the flow of private capital to economically distressed areas. He has reduced regulations and paperwork to make the Community Reinvestment Act more effective for borrowers and less burdensome for banks, and he has successfully defended the Community Reinvestment Act against Congressional efforts to undermine it.

He has also, and very importantly, launched the Community Development Financial Institutions Fund, or CDFI, to provide seed and expansion capital to community-based banks, credit unions, community loan funds, and micro-lenders. These institutions foster economic growth and job creation in their neighborhoods. When we issued our first call for CDFIs and traditional financial institutions to apply for Fund assistance and incentives, community requests exceeded current resources by 10 to 1.

Now, as Mrs. Clinton said, the President has asked Treasury to create a Presidential Awards program for excellence in micro-enterprise development. Today, I'm please to announced that we are launching these awards, under the CDFI Fund.

The Presidential Awards will recognize outstanding and innovative programs that provide access to credit, technical assistance, and training to micro-entrepreneurs. Four categories of awards to micro-enterprise development organizations will highlight excellence in program innovation, access to credit, development of entrepreneurial skills, and poverty alleviation. A fifth category will reward private sector, foundation, and governmental support for these micro-development organizations.

These non-monetary awards will allow micro-enterprise development organizations to compete for public recognition just as large American corporations now compete for the Malcolm Baldridge Award. And in rewarding the best in the country, the awards program will disseminate information to others about best practices, helping to advance micro-enterprise development more generally. Awards will be presented for the first time this fall.

On a broader front, let me say that these initiatives, from investing in human capital to improving access to capital, are enormously in the interest of all Americans, looked at from a purely hardheaded and business-like perspective. Simply put, I think this nation will fall far short of its full economic potential for all Americans unless our cities and distressed rural areas are healthy. And our social fabric will become weaker instead of stronger, again, for all of us, unless we tackle these problems successfully.

With strong public support for CDFI, the Community Reinvestment Act, the Low Income Housing Tax Credit, and our new micro-enterprise programs, we now have a chance to make locally driven, public-private partnerships reach communities across the land. We can help rebuild neighborhoods, create jobs, and restore hope in neighborhoods long left behind.

To accomplish this, all of us must meet our respective challenges. Our challenge, the government's challenge, is to act as catalyst with investments in people, seed capital and a helping start. Your challenge, and what this sixth annual AEO conference is all about, is continually to improve and grow. The challenge to individuals is to take advantage of educational opportunities and commit to hard work. The challenge to communities is to organize themselves for change. And the challenge to the business sector is to see its long term self-interest in bringing everyone into the economic mainstream.

It will take all of us rising to those challenges to succeed. But I believe that is the only way the United States can reach its full potential in the years and decades to come.

Thank you. Keep up the good work. It is making a difference all across America.

FOR IMMEDIATE RELEASE
Remarks as prepared for delivery
May 2, 1996

Good Morning. Although we can't join you in person, Secretary Rubin and I wanted to take this opportunity to congratulate the Association for Enterprise Opportunity and all your members on the important work you are doing to expand economic opportunity to all Americans. This is a vital undertaking, and your gathering comes at a crucial time.

The basis for any long-term solution to poverty rests in a community's ability to help those living in poverty raise their own incomes. Low-income Americans are capable and hard-working. What they lack is not initiative, but opportunity and access to credit. As one woman working to establish her small business in Colorado said to me, "Too many great ideas die in the parking lots of banks."

Members of AEO know the importance of microenterprise. You have provided people across our country with opportunity -- the opportunity to borrow small amounts of money and prove that all kinds of people are credit-worthy. You have given people the opportunity to gain technical knowledge to start small businesses or to bring some great ideas to life, and most important, to improve their own lives and the lives of their families.

In my travels throughout our country and around the world, I have seen first-hand the transforming effects small loans can have, especially for women and their families in both the developing and developed world. At the Grameen Bank in Bangladesh, I met a woman who used a small loan to buy a milk cow. After she paid off the loan with proceeds from the milk, she took out a loan for another cow. After repaying that loan, she decided it was time for her husband to help increase the family income. She took out a third loan to help him buy a rickshaw.

And I met a woman in Chile whose whole outlook on life was changed by the fact that someone took a risk and lent her money to buy a sewing machine. She said she felt like "a bird freed from its cage" when she received her first loan.

I became a believer in microenterprise years ago, when my husband was governor of Arkansas. We combined elements of the Grameen Bank and Chicago's South Shore Bank to create the Good Faith Fund. It began to make the kind of investments in that state that we wanted to see throughout the country.

Whether it is for a milk cow in Bangladesh or for a computer in Chicago, women and men need help, encouragement -- and credit -- to make that first investment. Here in the United States, we are working to build up a micro-enterprise network. It is still very young, but already several hundred programs, most of them represented here today, have enabled tens of thousands of Americans to gain access to credit and training as well as something more fundamental: self-respect and self-sufficiency. Some of the people served by these programs are on welfare. And they just needed a little help -- a jump start -- to realize their own potential. But too often that jump-start is hard to come by.

Last year at the United Nations Fourth World Conference on Women, where I was privileged to represent our country, the United States made two commitments to further self-employment and micro-enterprise in the United States. First, the President established a new Presidential Awards program to honor outstanding and innovative programs that provide access to credit, training or technical assistance to microentrepeneurs and potential microentrepeneurs. Today, we are happy to announce the structure of these awards.

The President also directed the Treasury Department to coordinate microenterprise programs across a number of our federal agencies to help ensure that those programs are doing the job they were designed to do. Additionally, the United States will continue to support microenterprise in developing countries through USAID.

In today's global economy, microenterprise development needs to become a key element in providing economic opportunity for women and men everywhere in the world.

I now have the pleasure of introducing Treasury Secretary Robert Rubin, who will discuss the Administration's initiatives and particularly the creation of the Presidential Awards for Excellence in Microenterprise development.