[Congressional Record Volume 144, Number 40 (Wednesday, April 1, 1998)]
[Extensions of Remarks]
[Page E541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


ON THE INTRODUCTION (BY REQUEST) OF THE COMMUNITY DEVELOPMENT FINANCIAL 
                  INSTITUTIONS FUND AMENDMENTS OF 1998

                                 ______
                                 

                          HON. BRUCE F. VENTO

                              of minnesota

                    in the house of representatives

                        Wednesday, April 1, 1998

  Mr. VENTO. Mr. Speaker, today I am introducing by request of the 
Administration, along with the Chairwoman of the Financial Institutions 
and Consumer Credit Subcommittee, Mrs. Roukema, the Community 
Development Financial Institutions Fund Amendments of 1998.
  The reauthorization of the Community Development Financial 
Institutions Fund should be an important part of the Financial 
Institutions and Consumer Credit agenda this year. The CDFI fund was 
established to increase access to credit in distressed areas and to 
provide community development and financial services opportunities to 
disadvantaged people. Created in 1994, funds allocated to the CDFI Fund 
help leverage additional private capital used by CDFIs to revitalize 
neighborhoods, encourage and promote entrepreneurs, restore private 
market activity in distressed communities and empower local residents. 
The Administration's FY 1999 budget has requested $125 million for the 
CDFI program and in concert with a reauthorization effort, we can 
improve and further empower the CDFI funded programs.
  Demand for the CDFI funded programs has exceeded expectations. The 
Treasury Department has reported that requests for assistance in the 
first two rounds have been approximately $500 million. Of the $125 
million requested by the Administration in FY 1998, only $80 million 
was appropriated. This, along with the earlier appropriations, has 
barely scratched the surface of the need for the unique activities of 
the CDFI Fund and its sister program, funded with one-third of the 
appropriations, the Bank Enterprise Act (BEA).
  I look forward to working with the Administration, Chairwoman Roukema 
and other Members of the Banking Committee on a reauthorization of the 
CDFI. We do need to act soon to help the CDFI and BEA programs to go 
forward in the future with new initiatives that can expand the CDFI 
Fund's tools for assisting community development financial 
institutions. CDFI provides seed money for the creation of jobs, brings 
capital into distressed communities, and lifts people out of poverty. 
With our efforts this year, we can maximize the benefits CDFIs can 
provide to underserved communities across the country.
  A section-by-section of the bill follows:

  Community Development Financial Institutions Fund Amendments Act of 
                   1998--Section-by-Section Analysis


               SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       This section designates this legislation as the Community 
     Development Financial Institutions Fund Amendments Act of 
     1998 and provides a table of contents.


 SECTION 2. TECHNICAL CORRECTIONS TO REFLECT STATUS OF THE FUND WITHIN 
     THE TREASURY DEPARTMENT; MISCELLANEOUS TECHNICAL CORRECTIONS.

       Subsection (a) amends the purpose section of the Community 
     Development Banking and Financial Institutions Act of 1994 
     (the Act) to add language that clarifies that the purpose of 
     the Act is to promote economic revitalization and community 
     development not only through investment in community 
     development financial institutions (CDFIs), but also through 
     incentives to insured depository institutions under the Bank 
     Enterprise Act of 1991.
       Subsections (b) and (c) amend the Act to reflect the intent 
     of subsequent appropriations provisions that made the 
     Community Development Financial Institutions Fund (CDFA Fund) 
     a wholly owned government corporation within the Treasury 
     Department. Technical amendments to the Act eliminate the 
     concept of a presidentially appointed Administrator of the 
     CDFI Fund, and, as with other Treasury programs, vest all of 
     the duties and responsibilities of the CDFI Fund in the 
     Secretary of the Treasury (subject to existing statutory 
     delegation authority). The Secretary may appoint all officers 
     and employees of the CDFI Fund, including a Director.
       Subsection (c) also makes technical changes to clarify that 
     the Inspector General of the Treasury Department is the 
     Inspector General of the CDFI Fund.


      SECTION 3. AMENDMENTS TO PROGRAMS ADMINISTERED BY THE FUND.

       Subsection (a) makes minor changes to the Community 
     Development Financial Institutions Awards Program (CDFI 
     Program) administered by the CDFI Fund. The amendments 
     provide that, for the training and technical assistance 
     programs already authorized by the Act, the Fund may enter 
     into cooperative agreements in addition to the other methods 
     described.
       Subsection (b) contains amendments clarifying the Bank 
     Enterprise Act (BEA) Awards Program for insured depository 
     institutions. The subsection provides technical amendments 
     and clarifies that the Fund may provide assessment credits to 
     insured depository institutions for increases in loans and 
     other assistance provided to CDFIs. The provisions clarify 
     the manner in which the Fund may take account of forms of 
     assistance provided by insured depository institutions. In 
     addition, the provisions permit the Fund to use alternative 
     eligibility requirements to determine the definition of a 
     ``qualified distressed community.'' Current criteria are 
     difficult to interpret and may exclude some insured 
     depository institutions, particularly those serving rural 
     areas, from participation in the BEA Program.


                 SECTION 4. EXTENSION OF AUTHORIZATION.

       This section authorizes appropriations in such amounts as 
     may be necessary for the CDFI Fund to carry out its 
     responsibilities under the Act.


    SECTION 5. AMENDMENTS TO THE SMALL BUSINESS CAPITAL ENHANCEMENT 
                                PROGRAM.

       Subtitle B of Title II of the Act currently provides the 
     CDFI Fund with authority to administer a program to encourage 
     states to implement small business ``capital access 
     programs'' with participation of certain depository 
     institutions. These ``capital access programs'' expand access 
     to small business loans by creating a loan loss reserve, 
     funded by the depository institution, the borrower, and the 
     state. This reserve fund allows banks to make more difficult 
     small business loans. The Fund, under the Small Business 
     Capital Enhancement (SBCE) Program, could reimburse 
     participating states for a portion of funds contributed to 
     these loan loss reserve accounts.
       The amendments made by section 5 remove statutory barriers 
     that currently block the CDFI Fund from administering the 
     SBCE Program. Subsection (a) allows CDFIs to participate in 
     the SBCE Program. Subsection (b) removes the requirement that 
     the SBCE Program receive a threshold appropriation before 
     beginning operations. Finally, this section will allow the 
     CDFI Fund (if the SBCE Program is operating) to reimburse 
     participating states according to criteria established by the 
     CDFI Fund in an amount up to 50 percent of the amount of 
     contributions by the states, until funds made available for 
     this purpose are expended. This permits the Fund to target 
     reimbursements to states that have not yet established these 
     programs or that have insufficient funds for effective 
     programs.

     

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