[Weekly Compilation of Presidential Documents Volume 29, Number 28 (Monday, July 19, 1993)]
[Pages 1339-1343]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks Announcing the Community Development Banking and Finance 
Initiative

 July 15, 1993

    Thank you very much. I want to say to Joe and Beverly and Tim, they 
have stated more eloquently the case than I ever could for the work we 
are here to begin today. I thank them for their presence here and for 
their fine presentations.
    I want to acknowledge, too, the presence in the audience of so many 
people who have been involved in community development financing for a 
long time. I thank all of you for coming from all over America. We have 
a remarkable group of people here from the United States Government from 
the execu- 

[[Page 1340]]

tive branch today: Secretary Bentsen and Under Secretary Newman from the 
Treasury Department; Secretary Espy and Under Secretary Bob Nash from 
the Agriculture Department; Under Secretary Terry Duvernay and Assistant 
Secretary Cuomo from HUD; the SBA Administrator, Erskine Bowles; the 
Comptroller of the Currency, Gene Ludwig; the Federal Reserve Board 
Governor George Lindsey; the Acting Director of the Office of Thrift 
Supervision, Jonathan Fiechter; the FDIC Acting Chair, Andrew Hove, and 
many, many others, showing that this administration has worked together 
to try to come up with this proposal.
    I'd also like to say that we have some specific Members of Congress 
who are here today whom I will acknowledge, but just for the rest of you 
who have been working in this field for a long time and who have felt 
left out, I'm going to do something I don't think I've ever done before. 
I'm going to ask every Member of Congress who is here to stand so you 
can see what support you have in the United States Congress. Would you 
all please stand? By my quick count, there are 41 or 42 Members of the 
Congress here, a very significant representation of people who asked me 
actually to--they felt so strongly about coming here--to delay the start 
of our ceremony this morning for a few moments so that they could 
complete their votes and still come up here.
    I'm particularly pleased that the House and Senate Banking Committee 
chairs have agreed to sponsor this legislation and shepherd its package 
through Congress. Representative Henry Gonzalez and Senator Don Riegle 
have both long been champions of reinvesting in our communities.
    The Senate Banking Committee will hold its hearing on this bill this 
afternoon at 2 p.m. The subcommittee chairs of the House, Congressmen 
Neal, Kanjorski, Kennedy, Frank, and Flake, have all joined to make sure 
this bill will receive consideration by the full House Banking Committee 
within the next few weeks.
    There are four Members of the House I would like to pay some special 
recognition to. First, Representative Joe Kennedy of Massachusetts, who 
has worked to make the Community Reinvestment Act a reality for all 
Americans in all communities. And I thank you for that. Second, 
Representative Floyd Flake of New York, who has worked to provide 
innovative ways to spur reinvestment by major financial institutions in 
communities and has actually tried to do something with his ideas in the 
private sector as well as with his work in Congress. I thank him very 
much for his efforts. Next, Representative Maxine Waters of California, 
who has been the conscience that has kept community development banking 
and strengthening the CRA on the Nation's legislative agenda. Thank you 
very much, Maxine. And finally, Congressman Bobby Rush of Illinois, who 
has forged a coalition of more than 70 cosponsors for a community 
development financing institutions bill that shares common ground with 
my initiative. I look forward to working with him in Congress and across 
the country to champion reinvesting in all of our communities, and I 
thank him for mobilizing 70 Members of the House of Representatives in 
this cause. Thank you, Bobby.
    I'd also like to pay some recognition to a person here who has for 
many years, more than I can remember, pointed out to the American people 
that most poor folks in this country and most people who have been left 
outside of the mainstream want a hand up, not a handout, Reverend Jesse 
Jackson. Thank you for being here.
    Ladies and gentlemen, as you know, I have just returned from the 
summit of the world's seven industrial nations in Tokyo. What I saw 
there indicated to me that, from Harlem to the south side of Chicago, to 
south central Los Angeles, there is a feeling shared from Tokyo to 
Toronto: People want more control over their lives, their families, 
their communities, and their countries. The movement for political 
reform is running in high gear in all these countries because there is 
such a demand for economic opportunity so that people can live up to 
their God-given abilities.
    This administration has tried to pursue this demand in two ways: 
first of all, to have a good overall economic policy, a policy for 
bringing the deficit down, a policy for increasing investment in our 
country, a policy for broadening the rules of trade in ways that help 
Americans who are working for a living.

[[Page 1341]]

But secondly, we have to recognize that there are certain specific 
problems that are unique to our country, unique to our States, unique to 
our communities. And they require a specific response. And so we have 
developed a technology policy, a policy for defense conversion for 
communities and people who have been hurt by cutbacks in defense 
spending. We have sent to the Congress a proposal to create empowerment 
zones which will complement this effort, to encourage people to invest 
in distressed rural and urban communities in this Nation. And today we 
take up the community financing issue.
    A few days ago when I was in Japan working to build a new global 
economy, my hand was strengthened because of the progress that has been 
made in Congress in dealing with these larger issues, reducing the 
deficit and investing more in education and training. It enabled me to 
ask our friendly competitors to lower their trade barriers so that we 
can increase American jobs and American exports, to work with us to 
increase economic growth, keep interest rates down, and make common 
cause to battle high unemployment, which is a problem in every advanced 
nation in the world today.
    Today I will report to a bipartisan leadership meeting of the 
Congress on the achievements of this summit. But I will also have to 
tell them that the challenge remains. We can only enjoy the fruits of 
the opportunities created at the Tokyo meeting if we follow through on 
the commitment to pass the economic plan now before the Congress and if 
we take the initiatives like the one we're here to celebrate today.
    To those who would do nothing or let us slide back into the status 
quo, I would say that we must go forward. We must adopt the largest 
deficit reduction plan in our history. Look how low the long-term 
interest rates are now because of the efforts that are being made. We 
must adopt these strategies to bring jobs to America. We must maintain 
our Nation's leadership in the global economy. On the issue of whether 
there must be economic change in a nation desperate for jobs and growth, 
there can be no doubt of the answer.
    Today I am sending to Congress an innovative proposal that will 
bring new life and new opportunity and new directions to communities all 
over America that lack capital and credit, the kinds of basic banking 
services that these three fine people needed so badly and had to look so 
long for. This proposal creates a fund to provide grants to new and 
existing community-based lenders. The fund will provide about $400 
million over 5 years and will employ a number of measures to increase 
significantly the total money provided to communities through these 
community institutions.
    Under this plan every dollar the fund provides to a community 
development bank must be matched at least by another dollar of private 
capital. Other community development financial institutions will also be 
required to match assistance as well. The Treasury Department predicts 
that this matching requirement and the leverage provided by the 
institutions will produce at least $2 billion in additional investment.
    If you look at the size of the average loan in these kinds of 
institutions leading to the number of jobs created that are represented 
by the three fine people on this platform today, the potential for 
creating new jobs in America through this initiative is absolutely 
enormous. And they can be created in places where people have long given 
up on the free enterprise system simply by making the free enterprise 
system work for a change for those people.
    These institutions come in a wide variety of sizes and shapes. They 
are banks with a special commitment to community development. They are 
community development banks set up for that purpose only. They are 
credit unions. They are microenterprise loan funds. I can tell you this, 
most of the enterprises that we are talking about helping, that were in 
existence in the 1980's that made loans to poor people who lived in 
their community or to struggling small business people had a lot lower 
failure rate than some of the high-flown financial schemes that were 
subsidized by other Government policies in the last decade.
    Because of the commitment and understanding of people in all 
different kinds of financial institutions, every type of community 
development financial institution will be eligible for assistance under 
our program.

[[Page 1342]]

The existing network of community lenders have demonstrated that when 
there is a constant commitment to this kind of development you can 
produce growth and jobs.
    Many of you with us today, from Chicago's Shore Bank to North 
Carolina's Self-Help Credit Union to Arkansas' Elkhorn Bank--which Mack 
McLarty and the First Lady served on the board of, and which I helped to 
raise funds for when I was in a previous position--understand how 
economic growth is built from the grassroots. It works in urban areas. 
It works in rural areas. We were wondering when we set up this bank in 
Arkansas whether small towns and rural areas really could benefit from 
the kind of strategy that had worked so brilliantly for the South Shore 
Bank in Chicago, and the answer turned out to be a resounding yes.
    The Government's role in this is crucial, but limited. The real 
solutions must come from the community, from the people who live there 
who know their neighbors. It is our job to empower those communities 
with the tools they need to generate growth and jobs, and then let the 
hard work and the determination of the people pay off.
    At the same time, I recognize that without the involvement and 
investment of major banks, low and moderate income communities will 
still be deprived of a full range of economic opportunity. The Community 
Reinvestment Act of 1977 requires that banks and thrifts meet the credit 
needs of the entire community in which they do business. And while the 
CRA has played an important role in making credit available to 
underserved urban and rural communities, I think we would all admit that 
it hasn't lived up to its potential. The current enforcement system 
relies too much on public relations documentation and not enough on real 
lending performance.
    This has been a pain for everybody involved: too much paperwork for 
the banks and not enough investment for the communities. That's why I am 
sending a memorandum to the four Federal banking regulators that 
requires them to implement a series of reforms around CRA, designed to 
increase investment in communities that need it, while simultaneously 
streamlining and clarifying the regulatory process. The policy will be 
good for banks, good for communities, good for borrowers, and it 
represents real change.
    These actions today fulfill a commitment I made during the last 
campaign when I promised that we would work hard to unlock the energy 
and the entrepreneurship that lies latent in the hearts and souls of men 
and women in this country in every community. This proposal will enable 
them to take a small loan and start a business, to turn their dreams 
into storefronts and then expand those storefronts into chains, creating 
jobs for their neighbors and bringing opportunities to their 
neighborhoods. It will make them a part of the movement for democratic 
capitalism and growth that is reshaping the entire world but has left 
too many Americans behind.
    Now, I'd like to introduce three people who are going to help us 
carry out these commitments: Hugh McColl, the CEO of NationsBank; Irving 
Henderson, the chair of the National Community Reinvestment Coalition; 
and Ron Grzywinski, the chairman of Shore Bank in Chicago.

[At this point, Mr. McColl, Mr. Henderson, and Mr. Grzywinski spoke on 
community development banking.]

    I'd like to conclude this morning's ceremony just by saying again, 
as I did when I opened, that I know that every one of you who's worked 
in this field for any length of time has a story or personal stories 
that you could tell. And I just want you to know that I am grateful for 
the work that you have done and the role that each of you have played in 
bringing this bill to its present point.
    I got on this issue as Governor when I saw so many needs that were 
unmet, and when the now Under Secretary of Agriculture for Community 
Development, Bob Nash, and I worked hard to use our existing authorities 
to help people who couldn't have access to credit. I learned about the 
South Shore Development Bank. And through them I met a remarkable man 
named Mohammed Yunis, who told me how he, through the Grameen Bank, had 
made market rate interest loans to poor village women in Bangladesh, and 
over 95 percent of them had actually paid the loans back.

[[Page 1343]]

    And then, this became part of our reinventing Government initiative 
of the Democratic Leadership Council and then an idea that the Vice 
President championed in his efforts to examine what we're doing here. A 
lot of you have helped me in my understanding of this. Floyd Flake 
showed me the businesses around his church. Hugh McColl stayed up half 
the night one night talking with me about the Community Reinvestment Act 
and how we could make it work. My friend, Charles Stith there, from 
Boston, has spent years on this.
    To all of you who have played any role on this, I thank you very 
much. And I ask you now to work with this wonderful representation from 
Congress to make sure we get the job done and do it in a hurry. Thank 
you. We're adjourned.

Note: The President spoke at 12:12 p.m. on the South Lawn at the White 
House. In his remarks, he referred to Timothy Bazemore, founder and 
president, Workers Owned Sewing Co.; Beverly Ross, owner, Lakeview 
Stables; Joseph Holland, owner, Ben and Jerry's Ice Cream Franchise of 
Harlem, New York, NY; Lawrence B. Lindsey, Federal Reserve Board 
Governor; and Rev. Charles R. Stith, national president, Organization 
for a New Equality (ONE).