[Federal Register Volume 73, Number 23 (Monday, February 4, 2008)]
[Notices]
[Pages 6558-6559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2008]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund


Request for Public Comments, Community Development Financial 
Institutions Program

AGENCY: Community Development Financial Institutions Fund, Department 
of the Treasury.

SUMMARY: This document invites comments from the public on certain 
issues regarding, for purposes of the Community Development Financial 
Institutions (CDFI) Program, the CDFI Fund's certification of entities 
as CDFIs, pursuant to the CDFI Program regulations set forth at 12 CFR 
1805.201. All materials submitted will be available for public 
inspection and copying.

DATES: Written comments should be received on or before March 5, 2008 
to be assured of consideration.

ADDRESSES: Comments should be sent by mail to: Certification and 
Training Manager, CDFI Fund, U.S. Department of the Treasury, 601 13th 
Street, NW., Suite 200 South, Washington, DC 20005; by e-mail to 
[email protected]; or by facsimile at (202) 622-7754. This is not 
a toll free number.

FOR FURTHER INFORMATION CONTACT: Information regarding the CDFI Fund 
and its programs may be downloaded from the CDFI Fund's Web site at 
http://www.cdfifund.gov.

SUPPLEMENTARY INFORMATION: The Community Development Banking and 
Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.) authorizes 
the CDFI Fund to select and provide financial assistance and technical 
assistance to eligible applicants through the CDFI Program. Pursuant to 
12 U.S.C. 4702(5)(a) and in accordance with regulations set forth at 12 
CFR 1805.201, the CDFI Fund certifies eligible entities as CDFIs. The 
capitalized terms found in this notice are defined in the CDFI Program 
regulations found at 12 CFR part 1805. Through this notice, the CDFI 
Fund is seeking comments from the public regarding the CDFI Fund's 
certification of organizations as CDFIs. Commentators are encouraged to 
consider, at a minimum, the following issues:
    (1) Primary Mission Criteria: To be certified as a CDFI, the entity 
must have a primary mission of community development (12 CFR 
1805.201(b)(1)).
    (a) Should the primary mission criteria differ by organization 
type? If so, how?
    (b)(i) Should the CDFI Fund consider the types of Financial 
Products offered by an entity as relevant to the primary mission 
criteria? Specifically, should the CDFI Fund review, as part of the 
certification process, evidence of the affordability of an entity's 
Financial Products to the intended customers?
    (ii) How else might the CDFI Fund ensure that CDFI certification is 
not given to entities that engage in what are commonly called 
``predatory lending practices'' or include so-called ``predatory 
lending terms'' in their lending products?
    (iii) Should the CDFI Fund require entities to provide Financial 
Products at a cost that is at least comparable to market rates or at 
some minimum level of affordability to their Target Markets in order to 
satisfy the primary mission criteria? If yes, how should market rates 
or minimum levels of affordability be determined?
    (2) Financing Entity Criteria: To be certified as a CDFI, an 
entity's predominant business activity must be the provision, in arms-
length transactions, of Financial Products, Development Services, and/
or other similar financing (12 CFR 1805.201(b)(2)).
    (a)(i) What minimum level of financing activity (i.e., number of 
transactions, dollar amount of transactions, years of operation, and/or 
financing) should the CDFI Fund consider to be acceptable to determine 
that an entity is a financing entity?
    (ii) How might this minimum level differ among organization types?
    (b)(i) Is three (3) months worth of financing capital a reasonable 
measure of an entity's ability to sustain its financing activities? 
Should the period of time be longer or shorter?
    (ii) What other measure(s) should the CDFI Fund use to determine 
that an entity can sustain its financing activities?
    (c) The CDFI Fund's definition of Financial Products includes 
Loans, Equity Investments, and similar financing activities (as 
determined by the CDFI Fund) including the purchase of loans originated 
by certified CDFIs and the provision of loan guarantees. Should the 
CDFI Fund expand this definition? If so, what other products should be 
included?
    (3) Target Market Criteria: In order to be certified as a CDFI, an 
entity must serve a Target Market consisting of one or more Investment 
Areas and/or Targeted Populations (12 CFR 1805.201(b)(3)).
    (a) Are the CDFI Fund's Target Market options (Investment Area, Low 
Income Target Population, and Other Targeted Population) clear? If not, 
how can the

[[Page 6559]]

CDFI Fund make the options more clear?
    (b) Should a certification applicant be required to demonstrate a 
track record of serving the requested Target Market? If so, what is an 
appropriate minimum time-frame to establish such a track record? Please 
provide reasons to support your response.
    (c) Should the CDFI Fund allow different types of organizations to 
meet the Target Market requirement at different benchmarks (i.e., 
percentage of activities directed toward the Target Market could 
deviate from the required 60 percent level for certain types of 
organizations)? If so, what level of activity would be acceptable for 
specific organization types?
    (c) Should certification applicants be required to have a physical 
presence in their Target Markets (i.e., a branch, an office, local 
partners)? If so, what is an acceptable minimum level of presence?
    (4) Accountability Criteria: To be certified as a CDFI, an entity 
must maintain accountability to residents of its Target Market through 
representation on its governing board or otherwise (12 CFR 
1805.201(b)(5)).
    (a) (i) How many governing and/or advisory board members 
representing a Target Market should the CDFI Fund require to determine 
that an entity is accountable to its Target Market?
    (ii) How should the geographic size, population density of the 
Target Market, and/or board type (governing vs. advisory) factor into 
the number of representative board members necessary to demonstrate 
accountability to a Target Market?
    (b) Should the CDFI Fund expand or restrict the ways that board 
members can be deemed to be representative of a Target Market?
    (c) (i) Should the CDFI Fund continue to allow certification 
applicants to demonstrate accountability to Target Markets through 
``other mechanisms'' (i.e. annual meetings, surveys)?
    (ii) If so, what additional types of mechanisms should be 
considered to demonstrate accountability?
    (5) Development Services Criteria: To be certified as a CDFI, an 
entity must provide Development Services in conjunction with its 
Financial Products, either directly or through an Affiliate, or through 
contract with another provider (12 CFR 1805.201(b)(4)).
    (a) What minimum level of Development Services should be expected 
of a CDFI (i.e. is one-on-one counseling enough or should training be 
more formal/standardized?)?
    (b) Should the CDFI Fund require an entity to provide Development 
Services that are linked to each Financial Product that it offers?
    (c) Should Development Services include broad efforts to increase 
financial education and literacy within an entity's Target Market?
    (6) Non-Governmental Entity Criteria: To be certified as a CDFI, an 
entity cannot be an agency or instrumentality of the United States, or 
any State or political subdivision thereof. An entity that is created 
by, or that receives substantial assistance from, one or more 
government entities may be a CDFI provided it is not controlled by such 
entities and maintains independent decision-making power over its 
activities (12 CFR 1805.201(b)(6)).
    (a) What minimal levels of government support for an entity's 
operations (e.g., funding and capitalization) or government involvement 
in an entity's lending or investment decisions (e.g., underwriting 
criteria or loan approval) should be considered acceptable for 
certification?
    (b) Should governmental ``operations support'' and government 
``involvement in lending and investment decisions'' be considered 
separately or should evidence of both be required in order to deem an 
entity as having failed to satisfy the non-governmental entity 
criteria?
    (7) CDFI Certification Application Process:
    (a) Should an electronic, web-based CDFI certification application 
process be implemented and, if so, should paper applications continue 
to be accepted?
    (b) (i) Should CDFI certification status extend for a fixed period 
of time before it expires? If so, is three (3) years an appropriate 
duration?
    (ii) Should CDFI certification be continued indefinitely if the 
certified CDFI does not request an award from the CDFI Fund?
    (iii) Is there any policy justification to designate different 
certification periods for different types of organizations? If so, how 
long should certification periods be for specific types of 
organizations?
    (c) What should be the primary components of a recertification 
process?
    (8) General: What other changes could the CDFI Fund make to improve 
the CDFI certification process that has not been addressed in the 
preceding questions?

    Authority: 12 U.S.C. 4703, 4703 note, 4704, 4706, 4707, 4717; 12 
CFR part 1805.

    Dated: January 28, 2008.
Donna J. Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. E8-2008 Filed 2-1-08; 8:45 am]
BILLING CODE 4810-70-P