Credit unions that have been recognized as community development financial institutions by the U.S. Treasury have a chance to obtain some unprecedented loan guarantees if they can organize themselves to take advantage of them.
The CDFI Bond Guarantee Program arose from the Small Business Jobs Act of 2010 and instructs Treasury to back the bonds or notes that CDFIs issue for investments in community or economic development work, according to the National Federation of Community Development Credit Unions.
The federation is spearheading the effort to help credit unions take advantage of the opportunity.
“Because the minimum bond amount that can be guaranteed is $100 million, we anticipate that there will be very few CDCUs or even CDFIs which may be initially able to participate on their own,” said National Federation CEO Clifford Rosenthal. “So we're exploring how the Federation could serve as an aggregator of funds for participating CDCUs.”
Rosenthal, who spoke during an Internet meeting to discuss the bond program, emphasized that the Treasury's CDFI Fund has not finished writing regulations which will govern the program and said that the Federation was exploring how the program could be structured to do the most good.
Rosenthal and other executives urged CUs who wish to participate in the program to contact the Federation.