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Federation joins Obama to support small biz lending
LANDOVER, Md. (10/26/09)--The National Federation of Community Development Credit Unions joined President Barack Obama and other elected officials last week to announce their support for small-business lending. “We will make capital even more affordable to the community development financial institutions that focus on providing credit to America's small businesses in our hardest hit rural and underserved communities,” said President Barack Obama at the roll-out of a series of Obama administration initiatives to spur small-business lending. The president’s address was delivered in the warehouse of Metropolitan Archives, a building that this small business (the archives) purchased with the help of a loan from the Small Business Administration (SBA). Dan Mica, president/CEO of the Credit Union National Association (CUNA), also attended the event and followed up Thursday with a letter to President Obama about credit union member business lending. CUNA believes the administration and Congress should support a legislative fix to the member business loan cap as an important step to ensure credit is available to small businesses, which will promote economic recovery, Mica emphasized. The president was joined by Treasury Secretary Tim Geithner, SBA administrator Karen Mills, Maryland Gov. Martin O'Malley; U.S. House of Representatives Majority Leader Steny Hoyer; and other elected officials. Mica and Cliff Rosenthal, federation president/CEO, were among about 60 invited guests at the announcement. Among credit union movement attendees was Bill Bynum, president/ CEO of Hope Community CU/Enterprise Corporation of the Delta (Jackson, Miss) and chairman of the Community Development Financial Institutions (CDFI) Advisory Board of the U.S. Treasury Department. “We believe that many more credit unions will seek certification now, and we are delighted that the CDFI Fund has committed itself to an expedited review process,” Rosenthal said. Community development financial institutions include credit unions, banks, loan funds, and venture capital funds that are certified by the Treasury Department’s CDFI Fund in recognition of their mission and track record of serving low-income and underserved communities. Since its founding in 1994, the CDFI Fund has invested nearly $1 billion in CDFIs. The federation, itself a certified CDFI, has been a leader of the CDFI movement since the early 1990s. While details of the program will be forthcoming at a later date, some key features were announced. For credit unions, CDFI certification will be required. About 150 credit unions are certified CDFIs. The majority of those are federation members. The government’s investment in CDFI credit unions will be in the form of subordinated debt that will count as secondary capital, or regulatory net worth, for low-income credit unions. “We are pleased that the Treasury Department has adopted this structure, and that the proposed rate is 2% for the first eight years,” Rosenthal said. He said that credit unions must have both CDFI certification and low-income designation by the National Credit Union Association (NCUA) to participate. “Only low-income-designated credit unions currently have the power to accept secondary capital, Rosenthal added. “Conversely, low-income designation without CDFI certification will not make a credit union eligible. It's clear that CDFI certification will be a key credential for credit unions in the future, and the federation will continue to provide technical assistance to members seeking certification.” The Obama administration has provided momentum and support to the CDFI movement, more than doubling its appropriation request for the CDFI Fund and providing an additional $100 million in American Recovery and Reinvestment Act "stimulus" funding in the spring of 2009, the federation said. With such bright prospects, the federation said it is adamant in its resolve to expand credit union participation in the high-impact program. For more information, use the link.
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