Friends of Community Development Banks

Friends of Community Development Banks was formed to support CDFI banks. These financial institutions work in low-income communities and are struggling to stabilize the neighborhoods and small businesses that they serve and that have been crippled by the financial meltdown and economic crisis. These are small banks (the largest has under $3 billion in assets) and there are fewer than 100 of them in the whole country.

Friends of Community Development Banks advocates for implementation of the program announced by President Obama in October 2009 to make TARP funds available on favorable terms to all of these Community Development Financial Institutions (CDFIs). These banks did not create the financial meltdown. Often they are the only source of credit and financial services in low-income communities – resources that are desperately needed now to help small businesses and low-income communities recover.

Big banks have their friends. These small community development banks need our active friendship now. They are too small to fail.

What is a Community Development Bank?

A Community Development Bank (CDB) is a Federal Deposit Insurance Corporation-insured bank or thrift that has a primary mission of promoting community development. Often referred to as CDFI Banks, these institutions are distinct from traditional banks and thrifts because low income markets are their primary markets. Most traditional banks are not targeted to serving these markets. CDBs serve urban and rural communities that lack access to credit and are not adequately served by the traditional banking industry.

The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund has a certification process used to identify these institutions as specialized Community Development Financial Institutions (CDFIs). All CDFI Banks must demonstrate that at least 60% of their total lending, services, and other activities benefit low income communities.

What Do CDBs Do?

CDBs serve urban and rural communities that lack access to credit and consumer financial services. They work in partnership with their local communities to promote revitalization and access to capital among those that are often left out of the economic mainstream.

CDB Facts:

• CDBs build wealth in communities.
• CDBs are engaged in a wide range of lending support to affordable housing, small business, community facilities, mixed use and commercial real estate, and consumers. CDBs provide financial services and technical assistance to low income customers to help move them from the unbanked to the formal banking sector.
• CDBs provide technical assistance to make sure their customers become informed consumers, and understand the products and services they are receiving.
• CDBs do not practice any form of predatory lending.