October 5, 2007
HP-593

Treasury Awards $3.9 Billion to Encourage Private Sector Investments in Distressed Communities

Awards Announced Under 5th Round of New Markets Tax Credit Program

New Orleans- U.S. Treasury Deputy Secretary Robert Kimmitt and Treasury's Community Development Financial Institutions (CDFI) Fund Director Kimberly Reed announced today in New Orleans, La., the 61 organizations selected to receive $3.9 billion in tax credits for use in low-income communities.  Treasury awarded the credits under the 2007 round of the New Markets Tax Credit (NMTC) Program.

Deputy Secretary Kimmitt and Director Reed were in the Gulf for the announcement to highlight the 11 organizations receiving $400 million in NMTC for specific use in the redevelopment of the Hurricane Katrina Gulf Opportunity Zone (GO Zone). The 61 allocatees are headquartered in 24 states and the District of Columbia, but anticipate serving 45 states, D.C. and Puerto Rico. The remaining five states would be served by allocatees with a national service area.

"These tax credits are intended to spur new private sector investment in communities in need across the United States and encourage continued redevelopment and reconstruction in the Hurricane Katrina Gulf Opportunity Zone," said Deputy Secretary Kimmitt. "The vision of the Community Development Financial Institutions Fund is to help give all Americans access to affordable credit, capital, and financial services."

"These tax credits, totaling $3.9 billion, are important to encourage investment in rural and urban low-income communities across the United States," said CDFI Fund Director Reed. "We also are committed to helping those affected by Hurricane Katrina, and I am pleased how the New Markets Tax Credit Program is making a difference in the redevelopment of communities across the Gulf Coast." 

The NMTC Program attracts private-sector capital investment into the nation's urban and rural low-income areas to help finance community development projects, stimulate economic growth and create jobs.

The NMTC Program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entities (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period.

Substantially all of the taxpayer's investment must in turn be used by the CDE to make qualified investments in low-income communities. The 61 organizations were selected through a competitive application and rigorous review process.

The NMTC program is administered by Treasury's Community Development Financial Institutions (CDFI) Fund. Throughout the life of the NMTC Program, the CDFI Fund is authorized to allocate to CDEs the authority to issue to their investors up to the aggregate amount of $19.5 billion in equity as to which NMTCs can be claimed, including $1 billion for use in the GO Zone. In the five rounds to date, the CDFI Fund has made 294 awards totaling $16 billion in tax credit authority.

A complete list of the 61 organizations selected and additional information on the NMTC Program can be found on the CDFI Fund's web site at: www.cdfifund.gov

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October 4, 2007
HP-591

Treasurer Anna Escobedo Cabral Remarks
Before the Eastern Regional Conference
on Reaching Unbanked People

New York City - Thank you for that introduction. I'm pleased to be here this morning and to welcome all of you to the Eastern Regional Conference on Reaching Unbanked People. I want to recognize our many partners who have helped organize this conference. I also want to thank all of you for being here and joining us in our efforts to reach some of America's most financially vulnerable citizens – those who have no relationship with mainstream financial institutions, such as banks or credit unions.

Your participation is important today for a few reasons. First, I've spent the majority of my career working for the federal government, and I've learned that the government is most effective when we enlist the help of our many partners – the private sector, state and local governments and community-based organizations.

For example, Treasury is beginning an aggressive outreach campaign to connect with the homeowners who could face foreclosure in the next 18 months to two years. We want to encourage these homeowners to reach out to their lenders before they're hit with the payment shock of a mortgage reset. We know that for many people, products exist to help them. We want these homeowners to begin paying attention to their mortgage statements and talk to their lenders to determine their options early in the process.

There's a common misconception from borrowers that lenders want to take their homes, and as a result, borrowers do not reach out for help. In fact, we've heard that in 50 percent of foreclosures, the borrower never even spoke with their lender or a counselor. It is critical for borrowers to reach out as early as possible. In many cases, there may be a possibility to refinance or reduce the payment so the family can keep their home. If we can help keep more families in their homes, individuals, families, and our communities benefit, and our country and economy are better off as a whole.

The challenge to reaching struggling homeowners is similar to the challenge of reaching the unbanked. Just as we have to find creative ways to break down the barriers that keep borrowers from contacting their lenders, we must be innovative in our approaches to welcoming people into the financial mainstream. Our progress in reaching the unbanked population is only as strong as the partnerships we can create with each other.

This is a theme we've heard echoed in each of the three previous conferences we've held across the United States.

In Chicago we learned of effective partnerships and saw examples of the great work the Chicago Fed, community banks and others are doing to reach unbanked populations and new immigrants. In Texas, we learned about the unique challenges in border communities and saw creative business models community credit unions have adopted to bring in new customers. For example, one credit union offered small loans without a credit check on the condition that the individual receive broader financial education. Earlier this year, at the conference in Seattle, we heard about the efforts of Washington Mutual to reach out to the unbanked. We also heard about the unique challenges faced in serving diverse communities.

Today we're building on these discussions, and it's appropriate that we're here in New York City – the financial capital of the world.

That brings me to the second