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Administration plan would give distressed areas access to credit; low income areas would see capital boost plus credit help.

The Clinton administration presented a legislative proposal July 14 to promote investment in community development financial institutions in low income areas.

The Community Development Banking and Financial Institutions Act of 1993 will create a fund that provides money and technical assistance to community development financial institutions (CDFI) for capital, credit and development services in targeted areas. The CDFIs will be the vehicles for economic revitalization and community development.

Treasury Secretary Lloyd Bentsen, appearing before the Senate Committee on Banking, Housing and Urban Affairs, said that the Community Development Bank and Financial Institution Fund is "designed to facilitate the access to credit so desperately needed in economically distressed areas and by economically distressed populations."

Local governments are not included in many way in the definition of a CDFI. Therefore, a city that created and funded a CDC is not eligible to apply for these funds.

CDFIs are defined as any bank, savings association, depository institution holding company, credit union, micro-enterprise loan fund, community development corporation, community development revolving local fund, or minority-owned or other insured depository institution or non depository oranization that is primarily designed to promote community development and encourages input from residents in the designated areas it serves.

The Fund will contain a Board of Directors will consists of the Secretaries of Agriculture, Commerce, Housing and Urban Development, Treasury, the Small Business Administration and four private citizens appointed by the President.

These private citizens must represent community groups whose constituencies include low income persons or residents in the designated investment areas; have expertise in the operations and activities of insured depository institutions, and, have expertise in community development and lending.

The act provides $382 million for activities that "promote community development by developing, supporting, and strengthening the leding, investment, and capacity-building activities undertaken by institutions" that include business planning services, financial and credit services, marketing and management assitance and administrative activities.

Awards will be provided to CDFIs that can prove capable of carrying out the functions of act.
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Author:Barreto, Julio
Publication:Nation's Cities Weekly
Date:Jul 19, 1993
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