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April 30 is deadline for CDCI applications
WASHINGTON (4/26/10)—For credit unions and other Community Development Financial Institutions (CDFIs) interested in the U.S. Treasury Department’s Community Development Capital Initiative (CDCI), there is an April 30 deadline for applications. The CDCI program, announced Feb. 3, is designed to increase lending in low-income communities. It gives Treasury a means to invest low-cost capital in specific financial institutions, including certain certified CDFI credit unions. Qualified CDFIs can obtain up to 3.5% of their assets as secondary capital, which will count toward their regulatory net worth. (CDCI), expected to provide another $200 million to CDFI credit unions and banks. The April 30 deadline is an extension from the original April 2 date set for Low-income credit unions and April 16 cut-off for uncertified low-income credit unions (LICUs). Eligibility for the CDCI program will be determined by the National Credit Union Administration (NCUA) along with Treasury. CDCI funds are only available to CDFI-certified credit unions that are also low-income designated by NCUA. Credit unions without low-income designation are not permitted to accept Secondary Capital. Well-capitalized credit unions are expected to qualify readily, in the absence of material negative trends. Credit unions that fall below that standard may still qualify for funds if they can obtain matching secondary capital from non-governmental sources. For instance, the National Federation of Community Development Credit Unions (Federation) announced in March it would make $1 million in secondary capital available as matching funds for member CDCUs that might not be immediately eligible for CDCI investments. Also of note, the federation has developed a fact sheet covering nine frequently asked questions about the CDCI. The Federation document notes that while the program falls under the government's TARP authority, it is "very different from TARP for banks," which is often referred to as bailout money. CDCI is "not to bail out failing institutions," the Federation underscores. "It is a highly targeted program to enhance lending to low-income communities." Currently, an estimated 100 credit unions have applied for CDCI funds, and the federation estimates that awards will total around $200 million. Use the resource links below for more information.
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