It’s considerably less than the multi-billion bailout the commercial banking sector received as part of President Obama’s Recovery Act legislation, but battered community banking institutions will gladly take it.
On Monday, Treasury Secretary Tim Geithner pledged $90 million to help 59 Community Development Financial Institutions (CDFIs) in 26 states and Puerto Rico. CDFIs help companies, including many small businesses, in economically distressed urban, rural, and Native communities.
Geithner’s announcement comes on the heels of Federal Reserve Chairman Ben Bernanke’s speech that called for help for CDFIs at the Global Financial Literacy Summit in Washington, DC two weeks prior. Bernanke said, “while community development is a small part of our overall capital and credit markets, the Federal Reserve recognizes that these financial flows are critically important for many low- and moderate-income communities.”
In making his own announcement on CDFIs, Geithner said the increased funding “will help generate capital for small businesses, mortgage loans for homebuyers, and funding for affordable housing projects and other facilities in communities across the country.”
According to a forthcoming CDFI Data Project (“Providing Capital, Building Communities, Creating Impact – Fiscal Year 2007″) there are more than 1,000 CDFIs in the U.S., with a collective $25 billion in assets.