CDFI Fund Director Gambrell Touts Achievements and Challenges

Gambrell: The basic mission of the fund is to provide capital to create and expand financial institutions so that they can provide loans and other types of products to underserved areas. Since the fund was created [in 1994], the fund has made over 1,500 awards totaling $625 million. In the awards I announced earlier this year, I had the pleasure of awarding 13 awards to credit unions that totaled $4.6 million.

CU Times: Has the philosophical outlook of the program changed since it was created during the Clinton administration?

Gambrell: It hasn't changed, and interestingly enough, there is strong bipartisan support as well. That's one of the strengths of the program, both parties understand the strength of the program and its impact on communities across the country.

CU Times: You travel a lot, what's your sense of the perception of the program and if you could wave a magic wand and straighten out any misconceptions about it what would they be?

Gambrell: It's interesting. Even at [the NCUA's] Risk Management Conference in Chicago, one of the greatest misconceptions of folks representing credit unions is that they didn't all know about how they could tap into our resources, how they can apply and how they can become certified. We've taken it upon ourselves to do as much outreach as we can, this year and in the years ahead so we can make credit unions aware of the funds that are offered.

CU Times: How much of your money goes to credit unions?

Gambrell: About 18% of our financial institutions are credit unions. But we are trying to increase the number of credit unions who are certified. Last year, there were eight new credit unions that were certified, that is double the number in 2006.

CU Times: When you review applications or inspect how the programs are being run, what mistakes to do you see and what advice would you give to credit unions or others who are applying?

Gambrell: I don't think we're seeing any major mistakes. If anything, credit unions are just as competitive as those other organizations that are applying. In all applications, people have to talk about the impact that the program will have in the community and what programs they already have in place. But we're not seeing any glaring mistakes that credit unions are making.

But we're in real tough economic times and we've seen credit unions develop low-cost products for their members, anti-predatory lending products that get to the heart of trying to address issues related to check cashing and payday lending, low-cost mortgage products, financial education and credit counseling–all the components that I think are needed to make sure that residents [in their communities] remain financially stable and financially self-sufficient. These are often residents at the lowest income spectrum, so it's really important the role that credit unions play to make sure that those folks are in a stable situation given what's going on in the economy today.

CU Times: Are there problems that you hear about from other people in your department or other federal agencies that you wish were being addressed by people applying to you for grants?

Gambrell: There's always an interest in more money from recipients and stakeholders and we are historically oversubscribed. That's the nature of the work we do.

CU Times: For people who are applying for grants this year, what's the total amount of money that will be available?

Gambrell: We're still waiting for the congressional appropriations process to be finished. We will probably operate under a continuing resolution if the new budget isn't passed. This year, the fund's total appropriation was $94 million and we made $54 million in awards through this program, the rest went to other programs we administer, such as one for Native Americans and one for FDIC-regulated institutions. For next year, the House came in at $90 million and the Senate came in at $100 million.

CU Times: If you were to have the chance to sit down with John McCain or Barack Obama and they ask you for advice on how to change the program, since both have talked about these issues, what would you say?

Gambrell: If you look at the history of the fund, those institutions that become certified complement existing, traditional financial institutions, so they are competitive with them. For either of the candidates, I'd say that the emphasis has to be bringing more Americans into the financial mainstream and CDFI has played an important part in making that happen. If we are truly interested in making sure that

people are economically secure and self-sufficient then the way to do that is through the work that we do because we do it better than a whole lot of other organizations.

CU Times: What other areas would you like to get involved in?

Gambrell: We have done a great job allocating resources, but there are other opportunities. The housing bill gave us a new program to administer that focuses on affordable housing, especially in rental units.

We're also looking at our standard operating procedures so we can make maximum use of the funds we have. We want everyone to be clear about what their roles and responsibilities are. We have Booze Allen Hamilton in here now finalizing standard operating procedures and looking at our total operations. We've done internal assessments of every facet of the organization, so we are poised for the future. We want to be sure that our awards programs are not only efficient but effective, and we are getting the money out there very quickly. We want to make sure we can get the money out to those organizations very quickly so they can get the money out to community organizations.

CU Times: Are those proactive measures or responses to complaints? Have you had complaints that recipients aren't getting money fast enough?

Gambrell: There's always interest in getting money faster, but I don't think there is a hue and cry saying 'this simply isn't working.'

CU Times: How much will the new procedures speed up the process?

Gambrell: It's hard to say, but even a month I consider a victory and success. That's 30 days where the money is in the communities. One reason that the process sometimes takes so long is that we require matching funds, so we have to verify that the other funds are there before we can release our money. But we don't want to sacrifice the quality of the review process.

CU Times: Have there been any especially innovative programs?

Gambrell: Many of the CDFIs have been the [research and development] of the financial services industry. They've done things such as helped finance charter schools. They have been the champions of post home-purchase counseling.

CU Times: What's been your relationship with the presidential task force on financial literacy?

Gambrell: We send them information about what CDFIs are doing. But the important thing isn't just the education itself but whether it is linked to specific products and services. You can have a financial education program that is tied to a jobs training program or a counseling program.

CU Times: As you've traveled, have there been programs that you've funded that have really spoken to you?

Gambrell: Yes. I was up in Brooklyn recently. And my first appointment was in the New York region, and I lived in Brooklyn not too far from the Bedford Stuyvesant section. If anyone had told me when I went there [in the early 1990s] that you'd have a community where there were traditional financial institutions, I'd have said 'that's simply not possible.' A few months ago I went up there for the grand opening of the Brooklyn Federal Credit Union's first branch that they had in Bed Stuy. They were able to open the branch through the funding they were provided. They were extraordinarily excited. Here was a credit union branch in an area where the streets are filled with check cashing businesses and payday lenders, and now people had the chance to go to a traditional financial institution and conduct their business.

I went to the opening of the HOPE Community Credit Union in Memphis, and this was another opportunity to see a credit union right there in the community working on community development and providing low-cost products and services. Credit unions are able to work with smaller dollar amount loans in a way that banks do not. They have flexibility and accountability.

–cmarx@cutimes.com