Advocacy Action
Friends of Community Development Banks
November 13, 2009
Friends of Community Development Banks was formed in November 2009 by Day Piercy and Alison Alpert to advocate for expansive implementation of the CDFI Bank TARP program so that all CDFI banks qualify for funds.
Web site: www.friendsofcdbanks.net Email: info@friendsofcdbanks.net
Community Development Banks Are Too Small To Fail
Action Now: Geithner will make a decision soon … perhaps as soon as November 19
Email to Timothy Geithner, Secretary of the Treasury Department and Larry Summers, Director of President Obama’s National Economic Council. Urge them to implement the TARP CDFI Bank Program broadly and expansively. All CDFI Banks must have access to the CDFI Bank TARP program. (see sample email below)
Contact Democrats on the Senate Banking Committee to ask them to contact Geithner at Treasury Department and Larry Summers in the White House (see list of senators and sample message below)
The Problem
Large banks have their friends. Community Development Banks that serve small businesses and low-income communities need our active friendship now. They are struggling to stabilize the neighborhoods and small businesses they serve that have been crippled by the financial meltdown and economic crisis.
The Players
Community Development Banks are small banks (the largest has under $3 billion in assets) and there are fewer than 100 of these CDFI banks in the whole country. These banks are often the only source of credit and financial services in low-income communities that have been hard hit by the current economic downturn. A large number are stressed because of the economy in the communities they serve.
Their legal name is Community Development Financial Institutions (CDFIs) because they are certified by the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund as targeting 60% or greater of their total business activity to low income communities and people.
The Solution
The Administration has announced that TARP funds will be available on favorable terms for these Community Development Financial Institutions (CDFIs). On October 21, 2009 President Obama announced a program with three mechanisms to support job creation in small businesses:
Increases in SBA loan amounts,
TARP funds to banks under $1 billion (but only if they present a business plan showing how the money will support small business lending), and
TARP funds to banks certified as Community Development Financial Institutions (CDFIs).
The goal of the program, he said, is to “make more credit available to the smaller banks and community financial institutions that these [small] businesses depend on.” (Quoted from President’s speech on announcing the program.)
To qualify for the TARP CDFI bank program, banks must be certified by the Treasury as having as their primary mission service to low income communities or “target populations” (primarily minority populations). The TARP CDFI bank program would provide Tier 1 equity capital to CDFI Banks, at 2% annually for 8 years, when the rate would rise to 9% annually. However, CDFI bank participation is “subject to approval by . . . federal bank regulators.” This program will only work if it is implemented like the very first TARP program for very large banks. That program stabilized the financial system but didn’t do much for on-the-ground lending; now is the time to use TARP to make sure loans are made, especially in the communities that most need access to credit.
Treasury Secretary Timothy Geithner can implement this program quickly, broadly and expansively by making funds available to all CDFI banks, including financially distressed CDFIs.
Action #1: Email to Geithner and Summers
The Obama Administration has announced that TARP funds will be available on favorable terms for Community Development Financial Institution Banks (CDFIs). The program must be implemented expansively to make funds available to all CDFI Banks.
The decision about program regulations is being made by mid-November. Send Timothy Geithner and Larry Summers emails today (see sample below).
Large banks have their friends. Community Development Banks need our support and action now. These small banks are struggling to stabilize the low-income neighborhoods and small businesses they serve that have been crippled by the financial meltdown and economic crisis - that they did not cause.
Send email to:
Timothy Geithner: timothy.geithner@do.treas.gov
Secretary of the Treasury
Larry Summers: bryan_jung@who.eop.gov
Assistant to the President for Economic Policy
Subject line: Support Expansive CDFI Bank TARP Program
Community Development Banks have always loaned responsibly in low-income communities. They did not create the financial meltdown that has crippled the neighborhoods and businesses that they serve. Often these banks 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 from the current economic crisis. All CDFI Banks must have access to the CDFI Bank TARP program.
Action #2: Contact Fellow Advocates & Democratic members of the Senate Banking Committee
Christopher Dodd, Chairman (D-CT)
Tim Johnson (D-SD)
Charles Schumer (D-NY)
Evan Bayh (D-IN)
Robert Menendez (D-NJ)
Daniel Akaka (D-HI)
Sherrod Brown (D-OH)
John Tester (D-MT)
Herb Kohl (D-WI)
Mark Warner (D-VA)
Jeff Merkley (D-OR)
Email to Fellow Advocates
Subject line: Action TODAY: Senator [insert name] & community development banks
Please contact Senator [insert name] to urge him/her to contact Treasury Secretary Geithner today about regulations for special TARP funds for CDFI Banks. These are small community development banks that serve low-income communities and small business. Regulations must be written broadly and expansively in order for all CDFI Banks to qualify. Big banks have their friends. Community Development Banks need our support and action now. These small banks are struggling to stabilize the low-income neighborhoods and small businesses they serve that have been crippled by the financial meltdown and economic crisis - that they did not cause. The CDFI Bank TARP program must be implemented expansively in order for all CDFI Banks to qualify for funds.
Senator [insert name] is a member of the Banking Housing and Urban Affairs Committee. Please call the Senator’s office [insert number] and urge him to help. This is urgent so please take action today. Below is the message for the Senator:
Message to Senator [insert name]
Treasury Secretary Timothy Geithner will decide very soon about regulations for special CDFI Bank TARP funds. Regulations must be expansive to permit all CDFI Banks to qualify for funds. These banks work in low-income communities and with small businesses.
Community Development Banks have always loaned responsibly in low-income communities. They did not create the financial meltdown that has crippled the neighborhoods and businesses that they serve. Often these banks 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 from the current economic crisis. All CDFI Banks must have access to the CDFI Bank TARP program.
Please contact Timothy Geithner to urge broad, expansive implementation of CDFI Bank TARP Funds to all CDFI Banks and contact Lawrence Summers in the White House.
Thank you for your assistance in supporting the CDFI Banks that make such a difference in low-income communities.