Forty-eight community development credit unions that applied forfunds from the U.S. Treasury Department's Community DevelopmentCapital Initiative received them by the time the programdistribution closed last week.

The credit unions received almost $70 million in the form oflong-term, low-interest loans that they could use to supplementtheir capital.

“This is a day of celebration for CDCUs,” Cliff Rosenthal, CEOof the National Federation of Community Development Credit Unions,told reporters and supporters at a press conference the federationcalled to discuss the distribution. “This is the largest capitalinfusion in low-income, community development credit unions in my30 years of working with them,” he added.

The National Federation reported that credit unions represented57% of the total number of financial institutions that receivedCDCI money and that the CUs had received 12% of the total $570million that the program distributed.

Under the CDCI program, the Treasury took original TARP fundsthat had been distributed to banks and repaid and provided them tocommunity development banks and credit unions. But unlike theoriginal TARP program, Treasury targeted the healthiest communitydevelopment institutions as recipients for the CDCI funds. CDCUsand banks that could use the supplemental capital had to provetheir financial health to their regulator and be recognized ascommunity development financial institutions by the Treasury's CDFIFund.

“It's a common misconception that TARP funds only went to largeWall Street firms, but the CDCI program is yet another example ofhow TARP is providing critical assistance to Main Street financialinstitutions,” said Herbert Allison, Treasury Assistant Secretaryfor Financial Stability. “CDCI funding is helping to strengthenlocal financial institutions and deliver credit to small businessesand families.”

“Community development financial institutions have been at theforefront of the efforts to fight the economic recession in ournation's low-income communities,” said Donna J. Gambrell, directorthe CDFI fund. “At a time when many financial institutions havepulled back, CDFIs have actually increased their lending andinvestments in underserved communities. These CDCI investments willenable community banks, thrifts and credit unions to spur economicdevelopment in the communities that have been hit hardest by theeconomic downturn.”

But Rosenthal acknowledged that while the distributionrepresented a triumph for CDCUs, the moment was slightlybittersweet because relatively few credit unions persevered throughthe entire application process until they received the funds.

Rosenthal and other sources attributed the low number to severaldifferent factors, including a complicated and conservativeapplication process and the trouble some CUs had with the terms ofthe CDCI loans.

“The initial application to NCUA was very short, almostdeceptively so,” said Rosenthal, “For the second step, the CUs hadto submit secondary capital plans and that was somewhatcomplicated.”

Neither the NCUA nor the Treasury has released the finalnumbers, but the federation believes that 111 credit unionscompleted applications to the point of filling out secondarycapital plans and that the agency had recommended 85 CUs to theCDFI Fund as viable candidates for the money. Of that number, thefederation believes roughly 60 were awarded funds and then the 48were able to receive them.

Rosenthal attributed the final problems some credit unions hadaccepting the funds to a number of different issues.

Even after a credit union received a loan, Rosenthal explained,there were still obstacles. Because the loans were funded with TARPmoney, many different regulations remained in place for the CDCIprogram, none of which were crafted with credit unions in mind. Forexample, rules that were intended, at the big banks, to limit thebonuses of the top executives wound up limiting even the mostmodest merit pay or bonus programs for all a credit union'semployees when applied to CDCUs.

“We pushed back hard on some of these, but Treasury was adamant.These were in the statute and could not be changed and some creditunions could not do them,” Rosenthal said.

He recounted one requirement which led to every employee andvolunteer at a credit union, from the board chairman to thepart-time tellers, having to sign a pledge and share a great dealof personal information, and the CU's loan fell through when notall the employees would do it.

Finally, because the loans are issued in New York and areconsidered securities there, the CDCUs that received them had tomake sure that nothing in their operations conflicted with New Yorklaw and had to hire a New York lawyer to do it. This would havebeen far too expensive for many of the smaller CDCUs, but theNational Federation got some help in the form of pro-bono legalservices from lawyers affiliated with the Lawyers Alliance for NewYork, which has lawyers qualified in states across the country.

–[email protected]

The 48 CDCI-Awarded CUs

The following are the credit unions that receivedmoney from the CDCI program, their locations and the amounts ofmoney they received.

• - Alternatives FCU, Ithaca, N.Y., $2.23 million
  – Atlantic City FCU, Lander, Wyo., $2.50 million
  – Bethex FCU, Bronx, N.Y., $502,000
  – Border FCU, Del R?o, Texas, $3.26 million
  – Brewery CU, Milwaukee, Wis., $1.10 million
  – Brooklyn Cooperative FCU, Brooklyn, N.Y., $300,000
  – Buffalo Cooperative FCU, Buffalo, N.Y., $145,000
  – Butte FCU, Biggs, Calif., $1.00 million
  – Carter FCU, Springhill, La., $6.30 million
  – Community First Guam FCU, Hagatna, Guam, $2.65 million
  – Community Plus FCU, Rantoul, Ill., $450,000
  – Cooperative Center FCU, Berkeley, Calif., $2.80 million
  – DC FCU, Washington D.C., $1.52 million
  – East End Baptist Tabernacle FCU, Bridgeport, Conn., $7,000
  – Episcopal Community FCU, Los Angeles, Calif., $100,000
  – Fairfax County FCU, Fairfax, Va., $8.04 million
  – Faith Based FCU, Oceanside, Calif., $30,000
  – Fidelis FCU, New York, N.Y., $14,000
  – First Legacy Community CU, Charlotte, N.C., $1.00 million
  – Freedom First FCU, Salem, Va., $9.28 million
  – Gateway Community FCU, Missoula, Mont., $1.66 million
  – Genesee Co-op FCU, Rochester, N.Y., $300,000
  – Greater Kinston CU, Kinston, N.C., $350,000
  – Hill District FCU, Pittsburgh, Pa., $100,000
  – Hope Community CU, Jackson, Miss., $4.52 million
  – Independent Employees Group FCU, Hilo, Hawaii, $698,000
  – Liberty County Teachers FCU, Liberty, Texas, $435,000
  – Lower East Side People's FCU, New York, N.Y., $898,000
  – Neighborhood Trust FCU, New York, N.Y., $283,000
  – Northeast Community FCU, San Francisco, Calif., $350,000
  – North Side Community FCU, Chicago, Ill., $325,000
  – Opportunities CU, Burlington, Vt., $1.09 million
  – Phenix Pride FCU, Phenix City, Ala., $153,000
  – Prince Kuhio FCU, Honolulu, Hawaii, $273,000
  – Pyramid FCU, Tucson, Ariz., $2.50 million
  – Renaissance Community Development CU, ? Somerset, N.J.,$31,000
  – Santa Cruz Community CU, Santa Cruz, Calif., $2.83 million
  – Shreveport FCU, Shreveport, La., $2.65 million
  – Southern Chautauqua FCU, Lakewood, N.Y., $1.71 million
  – South Side CU, San Antonio, Texas, $1.10 million
  – Thurston Union of Low Income People CU, ? Olympia, Wash.,$75,000
  – Tongass FCU, Ketchikan, Alaska, $1.6 million
  – Tulane-Loyola FCU, New Orleans, La., $424,000
  – Union Baptist Church FCU, Fort Wayne, Ind., $10,000
  – Union Settlement FCU, New York, N.Y., $295,000
  – UNO FCU, New Orleans, La., $743,000
  – Vigo County FCU, Terre Haute, Ind., $1.23 million
  – Workers United FCU, New York, N.Y., $57,000