The hearing is called to order.
Today we will review the Community Development Financial Institions program at the Department of the Treasury.
The program was established in 1994 for a four year period.
I do not think anyone doubts that the purpose of the Fund is laudable -- and that is making small business loans in distressed areas. Institutions like the Self-Help Credit Union in Durham are making a very real difference in their communities.
The Fund is up for re-authorization this year. The Administration is seeking $125 million for the CDFI -- up from $80 million in Fiscal Year 1998. This is nearly a fifty percent increase.
The critical question for the Congress is whether the funds are being well spent. Moreover, we have to ask whether the CDFI Fund has the capability to handle increases in funding. Between 1997 and 1998, funding increased by $30 million -- this represented a 60% increase in funding.
The Fund has clearly gotten off to a rocky start. Both the Director and Deputy Director of the Fund had to resign last year for misleading Congressional investigators. Excessive contracting fees were paid. And awards went to a few choice institutions. Further the GAO has noted the Fund lacks the adequate standards to monitor the accomplishments of the CDFIs that receive awards.
Clearly, things are going to have to change if the
Fund is to survive and succeed. I am looking forward to
the testimony today so that we can determine what is the
future of the CDFI Fund.
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