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Testimony of Acting Assistant Secretary for Financial Institutions Amias Gerety before the Senate Subcommittee on Financial Services and General Government on the Fiscal Year 2015 Budget Proposal for the Community Development Financial Institutions Fund
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Good afternoon Chairman Udall, Ranking Member Johanns, and distinguished Members of the Subcommittee. Thank you for inviting me to speak in support of the President’s fiscal year 2015 Budget Request for the Treasury Department’s Community Development Financial Institutions Fund – or CDFI Fund.
I would like to start by expressing my appreciation to this Subcommittee and to Congress for its long history of support for the CDFI Fund.
The President’s 2015 Budget requests your continued strong support for the CDFI Fund and its critically important mission.
As a vital component of the Treasury, the CDFI Fund is closely aligned with Treasury’s core priority of promoting domestic economic growth.
The 2015 Budget requests $225 million to enable strong support for the:
•CDFI Fund’s flagship program, the CDFI Program, which spurs economic growth and increases access to capital in low-income communities;
•The Healthy Food Financing Initiative, which supports the growth of businesses that increase access to affordable, healthy food in low-income communities;
•The Native American CDFI Assistance Program, which increases access to credit, capital, and financial services in Native Communities; and
•Resources for the administration of the CDFI Fund.
The Budget also proposes a one-year extension of the CDFI Bond Guarantee Program, which provides a source of long-term capital to financial institutions that support lending in underserved communities.
The CDFI Fund’s programs create economic growth in communities often considered too risky for mainstream financial institutions. When I was in New Orleans earlier this month, I had the opportunity to see firsthand how CDFIs are providing critically needed financing for communities most in need.
One of the sites I visited was Circle Foods, a grocery store that opened in 1939. Circle Foods was New Orleans’ first African American-owned and -operated grocery store. In 2005, Circle Foods was heavily damaged by flooding in the 7th Ward caused by Hurricane Katrina. For years, the owner tried to secure financing to renovate and reopen the store, but was unable to find any willing lenders and investors.
That changed in 2012, when Hope Credit Union, a leading CDFI serving the Mid-South, provided Circle Foods with financing through a partnership that included the City of New Orleans’ Fresh Food Retail Initiative.
Thanks to Hope Credit Union, a new 22,000-square-foot Circle Foods reopened earlier this year and is now providing access to fresh produce and affordable food in the 7th Ward. In addition, the grocery store has created 62 new jobs, the majority of them filled by people who live in the local community.
This story is just one of many examples of how CDFIs are helping to meet critical needs in underserved communities.
CDFIs are dedicated to serving distressed and low-income communities. The data indicate that, on average, 70 percent of the customers of CDFIs are low- income and 60 percent are members of a minority community.
The CDFI Fund also strives to serve urban and rural areas proportionately. Over the last 10 years, it is reported that 25 percent of CDFI projects have been in non-metropolitan areas.
The financial support that CDFIs provide helps to strengthen communities and promote economic growth. The most recent annual impact data from CDFI Program awardees reflects that participants:
•Created or maintained more than 35,000 full-time jobs for low-income communities;
•Originated almost 6,500 small business and microenterprise loans;
•Financed almost 18,000 units of affordable housing; and
•Made more than 24,000 loans and investments totaling almost $2 billion.
The performance of CDFIs speaks volumes about their strength, commitment, and ability to provide financial services that expand opportunities for families in distressed communities.
The President’s 2015 Budget reflects a careful balance of savings proposals and targeted investments in key priorities. As the numbers reflect, the CDFI Fund has been and remains one of those key priorities. Continued strong funding is needed if the CDFI Fund is to be able to continue its critical work generating new economic opportunity where it’s needed most.
On behalf of everyone at Treasury and the CDFI Fund, I would like to again express our gratitude for the support of this Subcommittee, and I look forward to continuing to work with you in the future.
Mr. Chairman, this concludes my formal statement, and I will be happy to answer any of your questions.
=============
Good afternoon Chairman Udall, Ranking Member Johanns, and distinguished Members of the Subcommittee. Thank you for inviting me to speak in support of the President’s fiscal year 2015 Budget Request for the Treasury Department’s Community Development Financial Institutions Fund – or CDFI Fund.
I would like to start by expressing my appreciation to this Subcommittee and to Congress for its long history of support for the CDFI Fund.
The President’s 2015 Budget requests your continued strong support for the CDFI Fund and its critically important mission.
As a vital component of the Treasury, the CDFI Fund is closely aligned with Treasury’s core priority of promoting domestic economic growth.
The 2015 Budget requests $225 million to enable strong support for the:
•CDFI Fund’s flagship program, the CDFI Program, which spurs economic growth and increases access to capital in low-income communities;
•The Healthy Food Financing Initiative, which supports the growth of businesses that increase access to affordable, healthy food in low-income communities;
•The Native American CDFI Assistance Program, which increases access to credit, capital, and financial services in Native Communities; and
•Resources for the administration of the CDFI Fund.
The Budget also proposes a one-year extension of the CDFI Bond Guarantee Program, which provides a source of long-term capital to financial institutions that support lending in underserved communities.
The CDFI Fund’s programs create economic growth in communities often considered too risky for mainstream financial institutions. When I was in New Orleans earlier this month, I had the opportunity to see firsthand how CDFIs are providing critically needed financing for communities most in need.
One of the sites I visited was Circle Foods, a grocery store that opened in 1939. Circle Foods was New Orleans’ first African American-owned and -operated grocery store. In 2005, Circle Foods was heavily damaged by flooding in the 7th Ward caused by Hurricane Katrina. For years, the owner tried to secure financing to renovate and reopen the store, but was unable to find any willing lenders and investors.
That changed in 2012, when Hope Credit Union, a leading CDFI serving the Mid-South, provided Circle Foods with financing through a partnership that included the City of New Orleans’ Fresh Food Retail Initiative.
Thanks to Hope Credit Union, a new 22,000-square-foot Circle Foods reopened earlier this year and is now providing access to fresh produce and affordable food in the 7th Ward. In addition, the grocery store has created 62 new jobs, the majority of them filled by people who live in the local community.
This story is just one of many examples of how CDFIs are helping to meet critical needs in underserved communities.
CDFIs are dedicated to serving distressed and low-income communities. The data indicate that, on average, 70 percent of the customers of CDFIs are low- income and 60 percent are members of a minority community.
The CDFI Fund also strives to serve urban and rural areas proportionately. Over the last 10 years, it is reported that 25 percent of CDFI projects have been in non-metropolitan areas.
The financial support that CDFIs provide helps to strengthen communities and promote economic growth. The most recent annual impact data from CDFI Program awardees reflects that participants:
•Created or maintained more than 35,000 full-time jobs for low-income communities;
•Originated almost 6,500 small business and microenterprise loans;
•Financed almost 18,000 units of affordable housing; and
•Made more than 24,000 loans and investments totaling almost $2 billion.
The performance of CDFIs speaks volumes about their strength, commitment, and ability to provide financial services that expand opportunities for families in distressed communities.
The President’s 2015 Budget reflects a careful balance of savings proposals and targeted investments in key priorities. As the numbers reflect, the CDFI Fund has been and remains one of those key priorities. Continued strong funding is needed if the CDFI Fund is to be able to continue its critical work generating new economic opportunity where it’s needed most.
On behalf of everyone at Treasury and the CDFI Fund, I would like to again express our gratitude for the support of this Subcommittee, and I look forward to continuing to work with you in the future.
Mr. Chairman, this concludes my formal statement, and I will be happy to answer any of your questions.