Hearing Of The House Committee On Financial Services - Community Development Financial Institutions (CDFIs): Their Unique Role And Challenges Serving Lower-Income, Underserved And Minority Communities

Statement

Thank Mr. Chairman for holding this important hearing.
Community development financial institutions (CDFIs) work in markets
that have not been adequately served by traditional financial institutions and
also develop new markets in underdeveloped areas. While many of our
nation's lending institutions have been destabilized during the financial crisis,
CDFIs have weathered the storm. Although they serve a traditionally riskier
client base, their conservative lending approach has helped them retain a
relatively healthy portfolio and cause fewer losses to investors. Demand is up
and their biggest concern is maintaining liquidity so they can meet demand.
CDFIs differ from mainstream financial institutions in a number of
ways. They have specialized knowledge about the communities in which they
conduct business. This allows them to build meaningful relationships with
their customers and community leaders which translates into a willingness and
commitment to individualized and specialized programs. Theses types of
programs are often too time-consuming or costly for mainstream financial
institutions to implement.
A number of structural and systemic barriers threaten to limit CDFIs
future growth, creating a strategic challenge for the industry. Going forward,
we must ensure these institutions have our support and remain a priority for
the Administration.
Thank you, Mr. Chairman.

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