Despite Economy, Things Are Looking Up for CDFIs With Obama Support
Not only has the Congress and the Obama administration included $100 million in the economic stimulus package to help CDFIs, including credit unions, improve their operations and broaden their lending, the president's most recent budget declared the administration's intent to double the fund's appropriation from last year.
That means, should those numbers hold through the budgetary process, that the CDFI fund will have roughly $400 million to award to CDFIs in 2009-2010.
During the eight years of the George W. Bush administration, many CDFIs felt under attack. The Bush administration routinely targeted the U.S. Treasury's CDFI Fund for budgets cuts or elimination.
But now, under the Obama administration, the community development banks, community development credit unions, loan funds and venture capital funds that make up the CDFI industry have moved from being outsiders fighting for the scraps of the yearly budget process to being an element of the administration's economic policies.
"The president views the CDFI Fund and the programs we administer as a key part of his strategy to address the economic crisis," declared Donna Gambrell, director of the fund, speaking to attendees of the CDFI Coalition's CDFI Institute, held in Washington in the wake of one of the worst snow storms this winter.
"Traditional lending enterprises have been unable to meet increased demand, putting CDFIs at the forefront of our industry. These changes have come at a time when the CDFI industry has matured and flourished to the point that people in Washington and on Main Street have really noticed your good work."
The CDFI Institute is a yearly lobbying and educational event to train CDFIs in the ways of Washington and to increase Washington's awareness of CDFIs and what they do. And the recent turn around in attitude was in some ways a testament to how much both legislators and CDFI executives had learned from and about each other.
For example, in addition to praising the supporters of the CDFI Fund for having contacted their lawmakers during the economic stimulus debate, Gambrell, a Bush administration appointee whom the Obama administration has asked to stay on, went out of her way to praise the work of Senators Richard Durbin (D-Ill.), Max Baucus (D-Mont.) and Olympia Snowe (R-Maine) in supporting the fund and shepherding it through the legislative process.
She also noted that the increased attention and support from the nation's leaders had raised the stakes, as well as the profiles of both individual CDFIs and the overall fund.
While the economic stimulus package included language waiving a long-standing requirement that CDFIs find funds from other sources to match their requested fund awards, it also mandated that the fund come up with a plan to distribute the money within 60 days of the president signing the bill into law.
"I don't have anything big to announce at this luncheon," Gambrell told the meeting, "because we are still meeting daily with people from main
Treasury and the OMB [Office of Management and Budget] to tweak a few last issues, but I can assure
you all that Treasury and OMB want this money
out the door quickly."
But even as Gambrell and other speakers celebrated the burst of legislative and budgetary success that CDFIs have achieved, there were also plenty of other signs of their challenges as well.
One panel brought the meeting up to date on the different liquidity problems the CDFIs were facing, including credit unions, as bank supporters back away from previous support or just vanished from the marketplace overall in failures or mergers. Another panel discussed the changing needs of investors-foundations and others-with one executive predicting that finding new investors this year was going to require "a whole lot of shoe leather."
Other CDFI executives also indicated that they were not uniformly happy with legislators. When asked why he was attending the meeting, Brian Garrett, CEO of the Community Bank of the Bay, a CDFI and community bank in Oakland, Calif., replied that he "wanted to get in Barney Frank's face" about "throwing community banks under the bus."
"The way he has been talking, you would think all banks were the same bad guys when the community banks haven't been doing anything wrong," Garrett complained, adding that too many lawmakers "just didn't get banking."
"Take this bankruptcy thing they are talking about, letting bankruptcy judges cram down the mortgages. So they are going to tell a banker that he should write a mortgage that a bankruptcy judge could later drop to 50 cents on the dollar? Would I do that? I don't think so."
However, Frank, who was scheduled to address the meeting, was snowed in in Boston.
In a way, the snow proved a testament to the CDFI Coalition's growing clout. Last year the organization drew 130 participants to the institute and thought it prudent to reserve space for 150 this year but was surprised when over 200 braved the swirling snow to attend. Meeting participants were forced to sit at tables so tightly packed together that some found it difficult to find places for their briefcases and purses.