WASHINGTON -
"We are extremely pleased to see a larger portion of this year's CDFI awards made to credit unions," said Cliff Rosenthal, executive director of the National Federation of CDCUs, who helped found the CDFI program, of the 20% dedicated to credit unions this year. "We hear over and over from our members that their primary barrier to growth is access to capital."
"Serving people of modest means is not only challenging, but it can be more costly than serving wealthier communities," said Rosenthal. "Awards from the CDFI Fund have been indispensable for CDCUs and CDFIs to reach more people in need."
The biggest credit union recipient is ASI FCU, which will use its $960,000 grant to rebuild capital and expand into New Orleans neighborhoods devastated by Hurricane Katrina, as well as hire Vietnamese- and Spanish-speaking branch managers.
Generations Community CU, a young CDCU, will use its $955,000 grant to fund a mortgage program. Latino Community CU, will use its $860,000 award to leverage new lending. Self-Help CU, will use its $487,000 to attract additional deposits to support lending. Hope Community CU, will use its $480,000 to expand into the Gulfport/Biloxi and Memphis markets.
The National Federation of CDCUs will receive $600,000, which it will use for secondary capital investments under its Predatory Relief and Intervention Deposits (PRIDE) program.
PRIDE is a risk sharing deposit that can be used to collateralize loans made by credit unions to fight predatory or abusive lending. The Federation shares the risk on these loans by assuming the risk on 25% to 40% of the loan principal. Any losses to those loans are shared pro-rata between the credit union and the Federation.
When PRIDE deposits mature, the credit union repays the Federation the original deposit amount minus the Federation's share of losses realized on secured anti-predatory loans.
Other credit union recipients of CDFI funding are: Brooklyn Cooperative FCU ($394,000); Syracuse Cooperative FCU ($358,000); Hawaii First FCU ($99,000) and Independent Employers FCU ($98,000).
The focus for community development credit unions in this year's round of CDFI funding shifted somewhat from Wall Street to Tobacco Road, where three credit unions will share $2.3 million in grants. In past years, the focus was on the National Federation, based on Wall Street.
The three Durham, North Carolina-based credit unions, members of the North Carolina Minority Support Center, have all won CDFI grants in the past, but stand out this year because their share is almost 9% of the total awarded under the Treasury Department program this year.
Both the Self-Help organization, which includes Self-Help Ventures Fund and the Center for Responsible Lending, and the Federation, are among the biggest recipients of CDFI funding since the program's inception a decade ago, with each receiving more than $10 million since then. The CDFI program, the brainchild of Rosenthal, has provided almost $40 million in funds to credit unions during that period.
