Table of Contents:
Preface
On December 21, 1994, President Clinton and Vice President Gore announced the designation of twelve of America's large cities as the focus of American urban policy. For the next ten years some of the poorest and most marginalized neighborhoods in these cities will be Federal Empowerment Zones, Supplemental Empowerment Zones or Enhanced Enterprise Communities ("Zones"). The Zone program combines the best elements from generations of urban and social welfare programs with the tools and experience of the community development movement. It incorporates the "comprehensive neighborhood" approach, which ran successfully from the 1960's Model Cities program through the Community Development Block Grants (CDBG) and Urban Development Action Grants (UDAG) of the 1970's and 1980's. The two-pronged strategy: (1 ) focuses on leveraging private investment; and (2) fosters community development institutions. Underlying both prongs is the recognition of the limitations and the need for improvements in private credit markets in urban area.
It is no accident that each city applying for Zone designation proposed the creation of a community development financing mechanism. These communities are characterized by inadequate investment. They all suffer from barriers to credit access, where the demand for credit is not being met by existing financing institutions and mechanisms. They all have experienced redlining and abandonment by traditional sources of capital and financing institutions. They all lack thriving small businesses, owned and operated by community residents. They all have witnessed the movement of earnings and profits out of their communities. And, they all bear high real costs of doing business due to crime, drugs, lack of training and assistance for entrepreneurs and home owners.
It is easier to recognize the problems than to know how to design the solution. The goal of this Federal program is to generate economic development -- jobs and income -- by providing capital and the tools to use that capital, so that the people in these communities can improve their lives and become self-sufficient. The operative word is "empowerment." This paper lays out one approach to designing the Zone financial entity, after briefly surveying the field of community development finance. The financial "empowerment" model here is one (of many possibilities) which focuses on community needs and objectives; provides special assistance to Zone businesses and neighborhood housing groups; targets job creation geographically; and creates public/private partnerships. Most importantly, it is designed to provide linkages to the other major structures and programs of the Zone, such as job training, improved education, the introduction of new technology, community policing.
Return to Table of Contents
- EMPOWERMENT ZONE FUND: A MODEL
- BACKGROUND
Fifty years after the end of World War 11, the American economy has changed dramatically. It is more closely tied to the rest of the world than ever, with imports and exports having tripled their share of national output and the United States now the world's largest debtor nation. Gone is the American dominance in consumer manufacturing, and with it many high wage assembly line jobs. Banks, airlines, telephone companies, and broadcasting have been deregulated and buffeted by rapid changes in technology and competition.
Nowhere is the juxtaposition of the rapidly integrating global market and the isolated neighborhood economy a more obvious dilemma than in America's central cities. As the urban economic base has gone from producing mainly goods to producing services, the largest cities have lost more than half of their manufacturing jobs, which had provided employment for many residents. While urban areas still draw new immigrants and young professionals, today inner cities have lost a sizeable working population and have some of the country's greatest concentrations of poverty, unemployment, and educational drop-outs. There are visible pockets of economic decline: whole blocks of shops remain vacant and boarded up for-years and housing has deteriorated beyond the point of redemption. There are entire inner city neighborhoods without banks and licensed taxicab services, getting by on shadow substitutes that are expensive and perform poorly.
At the local level there has been much focus on the access to capital and credit that are essential to a healthy economy. Without it, businesses cannot be born or expand, residents cannot buy, sell or repair their homes, and local communities cannot offer economic opportunity to their members. In many communities, those who need credit cannot get it or cannot afford it. Often they have nowhere to go. They have been ignored or abandoned by conventional financial institutions.
The capital market failures, and the resulting gaps in capital availability, are now well documented and understood. Many potential borrowers cannot access credit because they do not meet conventional credit standards. Real factors raise the cost of credit: the impact of crime and drugs on neighborhood businesses and property values; the higher underwriting and transactions costs of small business loans; the lack of training and technical assistance. programs for small business owners that prevent them from developing viable business plans and becoming effective business managers. In addition, there are some ways of doing business, such as a high aversion to risk, unfair means of screening (e.g. redlining), lack of loan standardization procedures, liquidity, and public regulations limiting lenders' ability to rely on certain types of collateral, which characterize market failure as well. These "capital gaps" have generated a number of responses, from communities, government, financial institutions, and nongovernment organizations (NGOs), to provide access to capital in starved neighborhoods. The most extensive and successful have been in housing finance. *Note
The focus on the housing market is easy to understand. First, the urban deterioration and loss of affordable housing in low and moderate income neighborhoods is highly visible. Housing values reflect a neighborhood's value and vice versa. Since the late 1960's, experts have pointed to the inability to access financing as the major source of the problem. They blamed redlining for severely limiting the number of low and middle-income buyers, resulting in property deterioration and abandonment. Without access to financing, neighborhood stability is compromised, since existing property is not maintained or rehabilitated, potential buyers cannot enter the market and present owners cannot refinance.
Second, housing is important in every one's life. Improving its quality and creating greater access to it generate notice and get neighbors involved. Housing needs provide an excellent organizing issue and a point of political pressure. Third, the housing finance market is huge and well organized, with a strong infrastructure of specialized financial institutions. Until recently, savings and loan institutions' sole purpose was to provide mortgages for home ownership. There are other organizations which guarantee and insure mortgages, bundle them and use the income flows to back bonds, thus ensuring a thriving secondary market. In this way, the mortgage product is standardized, financial institutions act as generators, but not necessarily holders, of mortgages, and long-term investors have a liquid investment.
Finally, the government is a significant actor in housing credit. It regulates the financial institutions which originate mortgages. Through the FHA, it insures mortgage loans. Through institutions such as Fannie Mae, Ginnie Mae, and Freddie Mac, it has created the mortgage backed security, which is the foundation of the secondary mortgage market. It provides the mortgage interest deduction for home ownership in the personal income tax. It provides the low income tax credit and subsidies to corporations for low income multi-family housing. It supports rents, through subsidies to families with low income. It provides rent money through income transfer programs.
The threatened loss of affordable inner city housing and the substantiation of the practice of redlining by traditional financial institutions generated a significant response. There are now an extensive array of programs, policies and institutions at work in the inner city housing credit market. These combine credit market regulation and reforms, infusions of capital, new housing finance products, new development organizations, and new types of financing institutions. These changes are the result of public/private/non-profit partnerships as well as conscious government policy. Some examples serve to illustrate the success and the limitations of efforts to open up access to capital in inner city neighborhoods.
The best known of the policy tools has been the Community Reinvestment Act of 1977 (CRA), which directly addresses access to credit. In the CRA, Congress requires regulated financial institutions to demonstrate that they serve the "convenience and needs" (including the need for credit) of the communities in which they are chartered to do business and empowers regulators to encourage financial institutions to fulfill this mission "consistent with the safe and sound operation of such institutions". The regulators also assess an institution's record of meeting the credit needs of its entire community, including the low- and moderate-income ones, and take that record into account in evaluating any application for a branch. The CRA has the potential to reverse many of the disinvestment trends that plague the urban credit markets, and "...though precise estimates are unavailable, it is clear that significantly more money is being invested in central cities than would otherwise be the case." But, the CRA's impact has been limited largely to physical improvements such as commercial projects and housing.
At the same time, new organizations have sprouted to restore downtown areas and revitalize neighborhood housing and commercial strips. in a number of cities, - private business readers, in partnership with the government, have revitalized downtown areas with new development that encompasses offices, hotels, convention facilities and tourist attractions. In other cities, the private sector, leveraging government housing and mortgage guarantee programs, has focused on stabilizing neighborhood housing in areas that border on abandonment, but still have preservable housing stock. Coincident with the improvements in housing finance has been the growth and expansion of a number of community development corporations (CDCs), some of which specialize in housing and others of which try to spread the model to financing small business development. CDCs are small-scale developers focused on both the physical improvement of their neighborhoods and the entrepreneurial and organizing skills of their volunteers and members. The National Congress for Community Economic Development (NCCED) serves as their trade association. Most receive help from foundations and philanthropic organizations, and some are even formed by commercial banks or groups of financial institutions.
Working as intermediaries to these CDCs are three major national non-profit organizations which are not, themselves, community based: the Local Initiatives Support Corporation (LISC); the Enterprise Foundation; and, the Neighborhood Reinvestment Corporation. They act as financial intermediaries by helping to create and expand a secondary market to raise funds for lending, and they re-cycle capital back to CDCs. In addition, they provide technical assistance as well as some financial and operating support to CDCs.
Interestingly, these various approaches to housing finance represent a weaving of "national" policy and institutions (e.g., CRA and the secondary mortgage market), with "local" actors (e.g., CDCs and CDHOs). Ultimately, many of the local initiatives have served as national models. Most importantly, with considerable analysis and experience, the broadening and deepening of the housing credit market and the effort to eliminate barriers to credit for low and moderate income inner city residents has involved separating a "huge problem" into a number of specific types of credit and types of housing, and then applying targeted new solutions and new financial products to each.
Unfortunately, many financial institutions interpret CRA as applying solely or primarily to mortgage lending and the access to mortgage finance. For many, improved access to business credit is not yet addressed. Yet, there is evidence of significant credit "gaps...for long-term and unsecured debt for new. . .and early stage businesses, equity financing for...businesses. ..that are unlikely to go public, and for small businesses that want to develop new products..." While there is a push by advocates to strengthen CRA in business lending, the gaps in the business credit market have been approached as well through the creation of a number of new financial institutions focusing on local economic development.
The Community Development Financial Institutions (CDFls), which have emerged in the past twenty years, offer the link between community housing finance and community economic development. With little government support, this is now a $700 million CDFI industry which has generated more than $2 billion in loans. While some have focused most successfully on housing finance, they generally see themselves as carrying a mandate to encourage entrepreneurship, self-sufficiency and creative problem solving, CDFls measure their success by both traditional profit standards and by the building of linkages with the rest of the local economy -- businesses, professions, voluntary organizations, churches, families, etc.
CDFls take a number of forms, pursuing different segments of the business and credit markets. Here are the main types:
- community bank holding companies
- community development credit unions
- community development loan funds
- micro-loan funds
Return to Table of Contents
Community Bank Holding Companies
CD bank holding companies -- their affiliated banks and for-profit and nonprofit corporations -- provide credit to community businesses and households through a traditional, federally insured and regulated deposit institution, such as a bank, credit union or savings and loan. They provide other services through non-depository affiliates. Like traditional financial institutions, these holding companies grow by retaining profits from their investments and by attracting additional outside capital. As banking, or thrift, institutions, they face the same regulations and judgements on loan quality as traditional financial institutions, which constrains the ability to reach under-served markets. Such standard depository institutions cannot take an equity stake in a community business; they cannot provide training or support services; they cannot finance a small business incubator. Their ratio of loans to deposits is strictly regulated. Therefore, they use subsidiaries or affiliates, which may be for-profit and non-profit, to perform such functions and provide other development needs, such as technical assistance, subsidies or grants.
Perhaps the best known CD bank is Shorebank Corporation, founded in 1973. Organized as a bank holding company, its principal subsidiary is the South Shore Bank of Chicago, a regulated, deposit bank. In addition, there are three wholly-owned subsidiaries in the Chicago area: a profit-making real estate group; a (501 ) (3) tax exempt affiliate, that initiates and manages economic development projects; and a for profit and SBA-licensed minority enterprise small business investment corporation (SSBIC) that makes equity capital and subordinate loan investments; and, Shorebank is now expanding into other urban areas and into providing technical assistance on community development finance. The history of South Shore illustrate the strengths and limitations of regulated banks in community development finance. It took South Shore Bank about ten years to become profitable. Initial campaigns to increase deposits from the neighborhood community failed for the most part, as did the initial strategy of consumer and commercial lending. Through time, profitability came from reaching outside the community for deposits (to foundations, corporations, religious groups, and wealthy individuals) in the form of "development deposits" and by concentrating lending on the rehabilitation of multi-family housing (the predominant form of housing) in the South Shore neighborhood of Chicago. The success of South Shore Bank is attributed to its own capital base which makes it self-sustaining, the fact that the scale of its endeavor being appropriate to the problem, and the ability to attract resources to the community. Its diversification into other financing institutions and the development of a separate arm for technical assistance make it the prototype community bank holding company.
Return to Table of Contents
Community Development Credit Unions
Like all credit unions, CDCUs are regulated, federally insured,'tax exempt depository institutions that are owned cooperatively by their members, governed on a one-person-one-vote system. Most CDCUs offer a basic package of retail banking services -- bank accounts; check cashing; financial planning; and personal, car, tuition and home repair loans. Tight ratios of loans to deposits by regulators constrain the ability of credit unions to leverage significant amounts of capital. Their contribution to community development comes largely from their ability to provide their members with access into the financial mainstream of the credit market: a history of credit worthiness, secure savings, regular deposits and payroll deductions, and sound personal financial management. Of the estimated 12,000 or so credit unions, there are as many as 1,000 CDCUs around the country. The National Federation of Community Development Credit Unions claims 125 members, in 35 states, which serve predominantly low-income communities. Roughly two-thirds are in inner cities and one-third in rural areas. According to the Federation, these CDCUs have loss rates of less than 2 percent. All credit unions make loans to their members; CDCUs strive to make loans that enable members to get and keep jobs, start and expand businesses, and improve members' property. Many CDCUs also work with other community organizations to lend to rehabilitate apartment buildings.
Return to Table of Contents
Community Development Loan Funds
CDLFs are unregulated and uninsured financial intermediaries that raise capital from (individual and institutional) social investors at below market rates of return. They do project lending primarily to non-profit and cooperative housing and business developers, thus filling a highly specialized market niche. For these types of projects, access to financing from more traditional sources may be blocked due to a lack of credit history, or the need for extensive technical assistance, or the fact that many community development projects are not standardized and require multiple sources of finance, with requirements specially tailored to the individual circumstances. In other instances, there may be a high risk or long-term payoff, putting them beyond the reach of traditional lenders, and, even, involving the CDLF in an outright interest rate subsidy. CDCLs also operate as a bridge to conventional permanent financing by providing a reliable initial source of funding; conventional lenders commit after the CDLF loan provides comfort about the adequacy of the project's collateral. Generally the small cooperative structure of CDLFs allows low-cost provision of capital, reflecting superior access to specialized information-and a high degree of repayment loyalty. By 1995, the industry had existed about 20 years, with most of the growth in the last 10; only forty four funds belonged to the self-regulating National Association of Community Development Loan Funds, which sets voluntary fiduciary standards. Capitalization approaches $170 million, including about $45 million of equity. Approximately 3,400 individual and institutional investors have provided the assets and accepted below-market rates of return. Despite the absence of traditional risk management policies, default rates have been less than 2%.
A large and successful example of this model is the Community Preservation Corporation in New York City. Founded and capitalized in 1974 by a number of the City's banks, it has financed the rehabilitation/construction of more than 38,000 apartment units (about a $1.25 billion investment), focusing on stabilizing neighborhoods before they deteriorate. CPC serves as an intermediary, bringing together borrowers and developers, lenders and pension funds willing to provide a forward commitment for mortgage takeouts, and public agencies with subsidy and guarantee programs. It has managed to ensure fixed rate construction financing at a time when the outside market has not provided it. Public subsidies lower the cost of private capital and provide guaranteed mortgages at market rates to pension funds and banks; but, by blending the market rate with the publicly subsidized capital, CPC provides the borrower with a below-market rate loan. CPC generates its income through interest spreads on construction loans, commitment fees, and servicing fees. This model, through collaboration with Fannie Mae and Freddie Mac, is being replicated in Chicago and California.
Return to Table of Contents
Micro-Loan Funds
These entities concentrate on a unique segment of the business credit market and represent the smallest, least well capitalized, and least profitable part of the CDFI industry. They make short-term loans, on average only two years, of small amounts for the start-up or expansion of small businesses. In general, these funds fit within larger programs that comprise a comprehensive strategy to promote entrepreneurship. Given the small size of the loans, the high transaction costs, and the costs of providing technical assistance to borrowers, it is unlikely that such programs can be self-sufficient, even charging market rates of interest. Yet, they represent a comprehensive approach: the combination of skills development, creation of a credit history, job creation and financial education that may be viewed as an anti-poverty strategy as well as a strategy to improve the functioning of capital markets. Micro-lending was pioneered in the developing world, by Accion International in Latin America and Bangladesh's Grameen Bank. Micro enterprise is generally associated with the informal economy (unregulated, small-scale, and primarily made up of home-based enterprises), where there is generally not a separation between worker and owner, or, if there is, pay and working conditions are not regulated. Those who lack mobility and/or access to formal employment are usually captives of the informal sector, and many micro-enterprises are home-based. The hallmark of the developing country approach to micro-lending is the peer-group model, in which a small group of would-be entrepreneurs come together for the purpose of obtaining credit. After training and analyzing each other's business plan, the group selects a plan to receive the first loan. Once payments on that loan remain current for a set period of time, other members of the group are eligible to borrow. In most programs, if one member defaults, no one else is eligible to borrow. Members meet regularly to evaluate business plans, track repayments, exchange information and lend moral support. Group borrowing creates tremendous peer pressure to repay loans, and, by assuming administrative tasks, lowers the servicing costs
In the United States, micro-businesses are also described as very small -capitalized with less than $5,000 and usually employing less than five people. They tend to offer services oriented toward retail trade, other services or construction, and may be part of a cooperative, or located in a home or a commercial strip. Some enterprises are even part-time. This is a growing part of the American economy, with an estimated 51 million people engaged in home-based businesses, alone, a 56% increase in the past five years. As in the developing world, micro-enterprises are important in neighborhoods where there are few formal job opportunities and where there are people who have little formal education and training. Most micro-businesses lack access to traditional credit institutions, since in order to qualify for a business loan, a borrower must have collateral. Past that threshold, a business still has to satisfy relatively high income standards, have an established and verifiable credit history, and prove legal residency. In addition, the credit application process is complicated, lengthy, and time consuming. Traditionally in many immigrant groups, the extended family replaces the formal credit market as a source for start-up and small business capital.
In response to the lack of traditional credit sources for small scale entrepreneurs, American micro-loan funds were fostered during the 1980s - the first being established in 1983 -- by the Ford, Rockefeller and Charles Stewart Mott Foundations, seeking to replicate the successful programs abroad. In 1987 the federal government began providing aid to Micro enterprise programs in the United States. There are currently about 200 micro-enterprise development programs operating in almost every state; only 132 of them provide capital, while the rest offer technical assistance, peer support and help in the formation of peer groups. Collectively, these programs have loaned in excess of $44 million to more than 208,000 clients. In the U.S., micro-enterprise lending generally follows the standard model of individual lending; only about 20% operate group lending programs, even though about two-thirds of the programs work with low-income individuals or those receiving Aid to Families with Dependent Children.
In the future, CDFls expect stronger Federal government support. In addition to the Zones, whose financial entities will link with CDFls, there will be the Federal CDFI Fund, established by the Community Development Banking and Financial Institution Act of 1994, a Clinton Administration initiative. The Fund has $50 million for FY1995 (significantly smaller than the proposed $370 million), one third of which must go to banks or bank dominated (more than 25% bank ownership) organizations . The funds will provide matching money, on a dollar to dollar basis, to CDFls for: commercial facilities that promote revitalization, community stability, job creation or retention; businesses that provide jobs for low income people or that enhance the availability of products and services to low income people; community facilities; basic financial services; low income housing; and technical assistance of all types.
Return to Table of Contents
THE E-Z FUND
Even with the advent of community development banking and new commercial and non-profit institutions, there are serious problems with the capital markets in Zone neighborhoods. No major city has a comprehensive "delivery system" providing financing, technical assistance, and support for both housing and economic development. As importantly, there is a continuing need to build community involvement in economic development, to foster and reward entrepreneurial behavior, and to improve and deepen the Zone community's understanding of and participation in the economy. All the Zones recognized this and proposed creating a community financial entity to address these problems directly. But, both the role and the structure of such an entity is new and, to some extent, path breaking.
This section lays out one example, to serve as a template, of a financial entity for any Empowerment Zone. The model presented here should be taken as representing the minimum set of requirements for a financial entity to play a central role in the economic life of the Zone. From this point on, the Zone financial entity will be called the E-Z Fund, known as the "EZF."
Return to Table of Contents
WHAT IS IT?
As the center for community development financing, the EZF is a central institution of the Zone. Its goal is to contribute to economic growth and job creation in the Zone over an extended period of time by helping to create, retain and attract community owned businesses and housing.
It will attain this goal by: leveraging private capital (from commercial banks, other depository institutions, pension funds, and foundations) and the funds flowing from Federal, State and local government; encouraging or requiring saving, investing and ownership by Zone residents; assessing the unmet capital needs in the Zone and helping to create programs and financial institutions to fill such "capital gaps"; and ensuring the provision of technical support to Zone businesses, entrepreneurs and home owners.
Return to Table of Contents
Serving those seeking capital
For those seeking capital, the EZF will serve as the entry point into the financing system within the Zone. For Zone residents and entrepreneurs wishing to build and expand businesses and housing within the Zone, the EZF will open the door to meeting their capital needs, referring them to the right source of help among the range of existing (private, non-profit and government) financial assistance programs and helping them to make it through the credit process. Having opened the door for Zone residents and entrepreneurs, the EZF will continue to build a relationship with them as their credit needs change and their businesses evolve and mature.
Return to Table of Contents
Serving financial institutions
In effect, the EZF will be a bridge across the existing as well as any newly created financial programs to ensure the maximum and appropriate use of all. It does not duplicate, dismember or displace existing financial institutions. Rather, it helps to focus their work in an organized fashion, serving as a highly visible economic presence, creating strong linkages to and among the economic actors in the Zone, especially the private sources of capital. To play this role, the EZF (in conjunction with the Zone Board) will need to work cooperatively with existing institutions presently providing capital in the Zone, involving them in regular discussions and assessments of the Zone's credit needs and how to meet them.
Return to Table of Contents Serving the community
Local control and empowerment is an EZF goal, also. Improving the economy and raising the standard of living of the Zone residents extends beyond ensuring better access to capital and creating new wealth. It requires increasing the ability of Zone residents to understand and participate in the economy -- as consumers, savers, home-owners, employers and employees. This will require education and the use of incentives to reward risk-taking and generate returns from savings. It involves recognizing and exploiting fully the Zone's competitive advantages; lessening many of the distinctions between the Zone and surrounding areas; building the capacity of neighborhood organizations to stabilize and upgrade their areas by providing technical assistance and leadership training; and ensuring a skilled and education work force. In cooperation with commercial financial institutions, entities formed by the Zone legislation, and the major civic institutions, the EZF has a pivotal role to play in fostering this goal.
Further, local control and empowerment are embodied in the EZF, itself. Its procedures and operations must be open, accessible -- and nondiscriminatory, with emphasis on serving the poor and those who have been excluded. It will emphasize building relationships, ensuring that small loans and their repayment generate eligibility for subsequent loans. As the community grows, it will grow. As the Zone's economic needs change, it will have the flexibility to change its size and scale of operations. It will be controlled by the Zone community and accountable to that community -- its owners -- and to the Zone Board.
Finally, it will be owned by Zone residents. As their institution, it will foster individual savings and promote economic participation. Even as a nonprofit corporation, the EZF's survival will require that its community owners adhere to a business plan, determine its rate of expansion and growth, ensure its ability to generate cash and reserves against losses, chart its course in the innovation of new services and support to the Zone's businesses, and direct its ability to leverage public and private sources of capital. In this way, during the ten years of the Zone experiment, the community will be creating a permanent, sustainable institution that can survive beyond the term of the Federal funding. Under certain circumstances, the community may also be involved in selected ownership ventures, through a separate and distinct subsidiary of the EZF.
Return to Table of Contents
HOW DOES IT CONNECT TO THE REST OF THE ZONE?
First, this model assumes that the Zone is governed by an independent, non-profit governing board (Zone Board). While the relationship between the Zone Board and the EZF may vary from Zone to Zone, the EZF here, through its governance structure, is subordinate and accountable to the Zone Board. This assumption means, for example, that the Zone Board's Strategic Plan will be the blue-print coordinating financial services with employment training, education, home-ownership and other goals. Also, it is the role of the Zone Board to coordinate all parts of the implementation of the Zone's Strategic Plan, including setting the-priorities and issuing approval of all programs and projects.
Second, while the relationship between the EZF and other Zone institutions and structures will be determined by the Zone Board, for the EZF to work properly there should be numerous ties to housing, social services, employment training and (financial) educational structures within each Zone. Chart I offers a prototype of a Zone's main institutions and the relationships among them.
Third, this model assumes that there are a number of existing financial institutions within, and outside, the Zone, which meet some, but not all of the Zone's capital needs. Therefore, a large part of the role of the EZF is to identify what is missing and why, to coordinate and, if necessary, convene and organize the players in a way to meet the Zone's strategic plan and deliver the capital to the area's economy. This portion of the EZF's mission makes it an attractive candidate for help from philanthropic and non-profit allies, many of which are doing similar work around the country.
Return to Table of Contents
TO WHOM DOES IT BELONG?
The EZF will be chartered as a not-for-profit or co-operative corporation which will receive, manage and disburse the bulk of the funds related to the Zone. It will be capitalized by at least two sources: Federal and other government funds flowing into the Zone; and equity issued to residents of the Zone who choose to become owners. Additional capitalization is highly desirable and hopefully will be raised from private foundations and philanthropic organizations, banks, pension funds or other sources.
The EZF will be owned by Zone shareholders, who will be free to buy and sell shares at will, or according to the rules they, themselves, lay out. The charter will stipulate that there must be a threshold level of earnings generated and retained in each of the years of the decade-long Zone program to ensure the EZF's ongoing viability and its long-run permanence. It is realistic to expect it to take at least five years for the EZF to achieve the experience to generate a revenue flow, from fees and interest, which will make it self-sufficient.
The EZF will be governed by a Board of Directors, reflecting the community ownership of its outstanding equity and its accountability to the Zone Board. There are many possible variations, depending on the size of the Zone Board, the number of shareholders, the number of strong institutional relationships, etc. However, the general principle of a smaller, more manageable and more participatory Board is the goal. A Board which does not exceed fifteen members is envisaged here. It is suggested that the charter stipulate that the EZF Board of Directors be comprised of six appointees of the Zone Board and five persons elected by the shareholders; be elected by the shareholders at an annual meeting at the EZF or at the Zone Board headquarters; and, include the Chief Executive and Chief Operating Officer of the EZF.
Return to Table of Contents
WHAT DOES IT DO?
Given the state of the Zones' local capital markets, described earlier, there are a number of functions which the EZF will need to ensure take place:
Assess the Capital Gaps
At inception, and then on a recurring basis, the EZF will need to survey and catalogue the financial infrastructure of the Zone. It is possible that much of this was done in the process of applying for Zone status. However, the EZF will have to ensure it possesses a comprehensive, thorough and up-to-date baseline description of the Zone's financial infrastructure. In addition, the EZF will need to develop the internal staff to update the baseline periodically and be the repository of the detailed institutional information of the Zone's financial infrastructure.
This survey will be instrumental in determining where there are gaps in providing capital for small business creation and job growth, for large commercial development, for housing and neighborhood improvement, and even for public infrastructure within the Zone. It will provide the basis on which the EZF will determine which capital programs it may initially have to provide directly and in which segments of the market it will need to serve as a catalyst to further development, consolidation, or outreach among existing institutions.
While some of this work may be done outside of the EZF, it is not desirable that the knowledge of the Zone's capital market and its limitations, as well as the connections to the financial and business organizations, resides permanently outside of the EZF. So, while this part of the mission will require a huge range of skills from the staff, it is worth developing from the beginning, to ensure the strongest long term role for the EZF.
- Where is the generation of demand?
- Are there various credit products (e.g., subordinated debt, equity, commercial mortgages, micro loans, contract receivable financing, etc.) available?
- What is the state of the origination and servicing of loans?
- Are there enough funds?
- Are there credit enhancements, such as guarantees and insurance, where necessary?
- Is there liquidity?
In answering these questions, the EZF will also be establishing important linkages to the business community and their needs as well as to the credit practices of the financial community.
The answers to these questions will reach to much larger issues of organization and maturity in the Zone's capital market players. For example, the generation of demand involves making sure there is a steady stream of qualified borrowers, which often takes extensive outreach and technical assistance to fledgling entrepreneurs and developers. It will govern the programs to be provided by the Clinic (discussed below) as well, perhaps, as the establishment of some special incubators in the Zone. On the other side of the market, liquidity involves providing access to a secondary market, through the bundling and securitization of loans, to help to leverage a steady stream of private capital from commercial banks and other depository institutions, pension funds, and foundations.
Return to Table of Contents
Coordinate the Zone's Capital Market Institutions
Initially, the EZF can create a "forum" for the Zone's CDFls as well as intermediaries such as LISC to gather and begin to work together. At its most basic this 'forum" will serve to improve the flow of information, which should provide a plus to improving the market.
This role will start with the EZF assembling all the financial entities, lenders, etc. into the same room, talking and working together. That mission may require quite a bit of work to be successful. The EZF will need to recognize and manage the concerns of the existing financial entities toward its arrival on the scene. Many of these actors have been involved in the Zone community for a long time; some may remain or participate in this new endeavor most reluctantly. One cannot underestimate the difficult nature of making all of them comfortable with the mission and the organization of the EZF. If coordination, communication, and information sharing were easy, there would likely be more of it among the present actors. Issues of "turf" and institutional jealousies, as well as inertia, will need to be overcome. In addition, once issues turn from organization to capital allocation, regulated depository institutions may face anti-trust problems and issues of apportioning appropriate CRA credit with joint or pooled action. It is assumed here that the EZF, HUD and the President's EZ/EC Task Force can be called upon to intervene or work with the regulators to help to overcome such regulatory barriers should they arise.
Once the EZF has determined the strengths and weaknesses of the Zone's capital market, it will, on behalf of the Zone Board, generate a strategic plan to oversee the growth of the institutions to fill the vacant roles. At a minimum, the EZF must be capable of engaging in a sophisticated search process to identify possible outside providers to serve in these roles. If such providers are not found, the EZF must be capable of providing the staffing to initiate a business plan and organize the effort to establish entirely new entities.
As a fully integrated financial infrastructure develops and grows within the Zone, the EZF will help the existing institutions to delineate clearly their roles, as well as their relationship to the EZF and to each other. To clarify, sharpen and usefully define the lines between different types of entities -such as retail, revolving and micro loan funds; the SBA One-Stop-Capital-Shop; and community development banks -- will help in determining not only which entity does what (survey noted above), but also which can expand~ to cover unfilled demand.
To perform this role, the EZF and the Zone Board will have to focus not only on traditional issues of capital provision, but also on issues of organization. Within the context of the ~forum" that the EZF provides, it can raise issues of mergers or consolidations of CDFls and CDCs; help to create stronger relationships among some of the major actors in the Zone through interlocking boards of directors or advisors for some of the development and financial entities; establish a central physical location providing inexpensive and convenient space for these entities; and give training for board members and staffs. In many ways creative consolidation to foster growth among existing and fledgling institutions may prove to be one of the most important and innovative roles open to the EZF. Ultimately, it may need to draw on some financial incentives to accomplish this.
Return to Table of Contents
Provide Access to Capital
The EZF will serve as a gate-opener to capital for Zone businesses -- the only stop necessary to satisfy capital needs. In this role it will be aided enormously by the SBA's One-Stop-Capital Shop, which may handle a good part of the small business referrals. Still, the EZF will need to make sure that the smallest needs, especially the micro lending which is outside the scope of the SBA, are covered and encourage the establishment of peer group lending and support. Depending on a business's product/service and the stage of development of the management, the EZF staff will determine the size and risk of the necessary financing and capital sources. A goal of the EZF will be to develop a long-term relationship with existing and potential Zone entrepreneurs to assure the proper type of financing for Zone businesses throughout their growth process. Indeed, the EZF's success as the entry point into the financial system will rest strongly on its ability to assess needs according to the level of management skills, the stage of service or product development and the size of the (potential) market being served.
Return to Table of Contents
Lending
Lending provides a source of income support for the EZF, through origination and servicing fees as well as possible interest rate spreads. While the needs and gaps in the Zone's capital market (determined above) should govern the focus of the EZF's lending, an astute business sense will be needed to judge the market opportunities and get the pricing right.
Even with banks and other financial institutions making loans, there is likely to be a useful market niche for the EZF in providing small loans for short time periods to business people who simply do not have access to the sources of private capital. Since the issue is often availability and access, rather than price, there is a potential for strong income flow. Another potentially productive area for the EZF in providing capital to larger Zone businesses may be the provision of subordinated debt -- a smaller and less risky (thus lower return) role in financing than taking an ownership stake.
As noted earlier, the EZF will provide access to a number of sources of business lending, covering traditional SBA, commercial bank loans, micro-enterprise, working capital loans, project finance, commercial mortgages, physical or technological improvement loans, single family and multi-family housing finance, etc. No matter the source of the lending, the EZF will actively involve experienced entrepreneurs and professionals from within, and occasionally from outside, the Zone community in monitoring the loans and the subsequent business development. In addition, it will provide technical assistance to help to ensure the survival of businesses involved in the loan programs within the Zone.
Return to Table of Contents
Encourage Business Development
In its efforts to create good borrowers, the EZF will operate a Business Development Clinic (the Clinic). The Clinic, in collaboration with the educational and service organizations of the Zone, will identify and aid likely entrepreneurs and developers through the processes of business planning, including marketing, financial and other studies. It will deliver comprehensive, professional help, technology transfer, and entrepreneurial training to Zone entrepreneurs and businesses. It will serve as an information clearinghouse, provide free business consulting services, hold workshops to bring together entrepreneurs and investors, and coordinate technology initiatives with local educational institutions and job training facilities to help link Zone business development with the employment of Zone residents.
Realistically, the EZF cannot depend on a steady flow of "customers" coming through its doors, especially at the beginning. It will have to serve as a catalyst, seeking out foundations, other non-profits, and public organizations to help fund the up-front costs of such preliminary business development planning and demand generation.
Return to Table of Contents
Ownership Capital
It is not clear that taking an equity stake is a realistic option for-the EZF. It is not necessary for the Zone's success in generating jobs, income and economic growth. Much can be done through an array of lending arrangements and debt instruments, which carry lower risk. However, the ownership decision should not be precluded here.
If the Zone Board wishes to pursue this option, then there should be an ownership vehicle set up independently from the EZF. A Venture Capital Fund needs an entirely separate organization from the EZF: an independent board of directors, an independent board of investment advisors, and a separate staff. Not only must there be independent and professional expertise in all aspects of risking capital, but also it must be seen to be there. This ensures a fire-wall between the investment decision and all the other relationships being fostered in the Zone. This is not to say that the EZF's experience with a local business gets lost in the calculation. But rather that a fresh set of eyes examining the venture adds to the assurance of it being worthy of investment. It also provides the Zone Board, the EZF Board, the Venture Fund Board, and all potential customers, with a clear division of responsibility and lines of authority. Based on their experience, most community development financing experts feel strongly that a single entity, without such clear lines of authority and divisions of responsibility will have problems performing well both the education/advocacy function and the investment function. too.
The Venture Capital Fund allows its owners to share in the ownership of enterprises within the Zone, generating profits and dividends flowing to the shareholders. However, the levels of risk are not appropriate for the average Zone resident and may be unacceptable to all but a small group of wealthy or large institutional investors. If a Venture Fund is operating properly, some of its investments will fail. Issues of insulating community investors from those failures need to- be raised at the outset. There are different types of ownerships and tiers of rewards stemming from them. There may need to be consideration given to providing limited liability to community residents and their institutions if they participate in the Venture Fund
For the sake of prudence and diversification, even an independent Venture Fund may want always to work in partnership with other equity investors, including private venture capital funds, pension funds doing economically targeted investing, and other partnership funds, inside or outside the Zone. The Zone's Venture Fund may act in concert with other sources of capital to form a public-private partnership for industrial development or educational pursuits within the Zone.
Return to Table of Contents
Empower Economic Participation
The purpose of the Zone is to improve the economy, which will involve, in part, encouraging the development of traditional economic behavior on the part of Zone residents. Working in tandem with other Zone organizations and with traditional financial institutions, including savings and commercial banks, the EZF will need to encourage savings by Zone households. In part this will mean reaching out to residents, to school children, churches and civic organizations and providing a range of educational classes on household and business financial management. The EZF, although not a depository institution itself, will need to locate depository banking on-site for the convenience of Zone residents and businesses. The EZF will need to ensure that local businesses provide internships and summer jobs for Zone students. The EZF might also work with the employers to have the wages paid through a depository institution, thus introducing students to financial institutions and providing the basics of credit education. The EZF can also ensure that local business leaders conduct regular presentations at elementary and secondary schools in the Zone to build a understanding of business operations, entrepreneurship, and business planning.
The EZF and the Clinic will coordinate to provide technical assistance, training and counseling to Zone residents to foster home ownership. Both will provide credit education, consumer, saver and investor classes to Zone residents, including the development of a teaching module for the Zone schools
Most importantly, through equity and Zone residents' ownership, the EZF offers a basic lesson in corporate governance, as well as the management and control of financial organizations. It offers a unique opportunity for the Zone's residents and their civic infrastructure to form, run and control an organization of their own. The EZF's structure, organization, interaction and community links are the community's to shape.
To do all of these functions well and to fulfill its mission, the EZF will require first-rate direction, organization, staffing and technology. The success of the EZF requires a superior professional staff. A significant part of the EZF's work is strategic and directional, which requires professionals who understand the various components of the Zone's capital market needs and are able to produce a series of strategic plans throughout the ten year period of the Zone's life. A different aspect of the EZF's work is outreach, which requires "people" skills to ensure the EZF becoming rooted in the Zone community. And, of course, there will be an ongoing need for staff who know and can work with the various CDFls in and around the Zone.
Return to Table of Contents
CONCLUSION
This paper is a discussion document, presenting a model for the Zone cities to draw on as they build their community development financial institution.
History has shown that the task of broadening and deepening Zone capital markets is not an easy one. The forces pulling capital to other uses are considerable and growing stronger. The forces generating profitable opportunities for growth in America's central city communities are fragile, with the high real costs of doing business and of making loans and investments often-a significant barrier.
Fortunately, the past decade or more has brought changes in community capital institutions, here and in less developed countries, which offer lessons on which to draw. There are a range of community development organizations and financing institutions -- private, profit-making, non-profit and public -- which have grown up to fill special niches and needs in inner cities, struggling daily to build viable investments. They have been most successful, not least due to the Community Reinvestment Act and tax and other policies, in improving the financing of housing in inner city neighborhoods. Innovations in business finance and development have come more slowly and in smaller amounts.
These organizations cannot do the job by themselves. Their size is dwarfed by the needs and the potential; they are small, specialized and, often isolated. They need organizational help. They need resources. And, they need to be drawn together into a delivery system which is easy to use and meets borrowers' and communities' needs.
The model presented here -- an EZF capital delivery system -- attempts to make those linkages. The model sets forth a market intermediary, working between those who supply capital and those who would be their customers in the Zone. It goes beyond the information supplier and intermediary role, to envisaging an institution which actively makes loans and works in partnership with others to develop successful Zone businesses. And, it connects the Zones' financial needs to the rest of its economy -- to its residents, its students, its work force, its churches and civic institutions.
It is the goal of the Federal Empowerment Zone program that the communities chosen will, over the next ten years, grow jobs and income. The model presented here is meant as a mechanism to help make that happen and to ensure that as it does, the benefits and the rewards are reaped by the communities and their residents.
Return to Table of Contents
ENDNOTES
3. See Cisneros (1993) for a full description of the context of central city problems.
4. Parzen & Kieschnick (1992), especially Chapter 2.
11. See Brophy (1993) for a greater explanation.
12. Parzen and Kieschnick (1992).
13. This description draws heavily upon The Principles of Community Development Lending (1993).
14. This discussion draws heavily on Shorebank (1994) and Taub (1988).
17. Data provided from the National Association of Community Development Loan Funds.
18. See Community Preservation Corporation (1994).
21. Otero (1989b) and Cohen (1990).
26. U.S. Congress, Senate (1994).
Return to Table of Contents
SELECTED SOURCES
ALERT Community Information Exchange. 1990. "Micro enterprise Lending: Help For the 'Small' Small Business". CIE #29 (May/June). Washington DC.
Alpert, Mark. 1991. "The Ghetto's Hidden Wealth." Fortune, July 29, 1991.
Ando, Faith H. 1988. "An Analysis of Access to Bank Credit." Minority Economic Development Series No. 4. Center for Afro-American Studies. Los Angeles: Univ. of California.
Aspen Institute Self-Employment Learning Project. 1994. Directory of U.S. Micro enterprise Programs. Washington DC: Aspen Institute.
Association for Enterprise Opportunity, Center for Community Self-help, - Community Capital Bank, First Nations Development Institute, National Association of Community Development Loan Funds, National Federation of Community Development Credit Unions, and Woodstock Institute. 1993. "Principles of Community Development Lending & Proposals for Key Federal Support." Philadelphia. (Mimeo).
Balkin, Steven. 1989. Self-Employment For Low-Income People. New York: Praeger.
Bates, Timothy M. 1992. Major Studies of Minority Business: A Bibliographic Review. Washington DC:Joint Center for Political & Economic Studies.
____. 1993. Banking on Black Enterprise: The Potential of Emerging Firms for Revitalizing Urban Economies. Washington DC:Joint Center for Political & Economic Studies.
Berenbach, Shari and Diego Guzman. 1992. The Solidarity Group Experience Worldwide. Monograph Series No.7. Cambridge MA:ACCI6N Intl.
Berger, Allen N., ed., et.al. 1993. "Special Issue: The Efficiency of Financial Institutions." Journal of Banking and Finance, Apr. 1993.
Bingham, Richard D., ed. 1990. Financing Economic Development: An Institutional Response. Newbury Park CA:Saqe Publications.
Brophy, Paul C. 1993. "Emerging Approaches to-Community Development." In Cisneros 1993.
Callahan & Assoc. 1994. Callahan's Credit Union Directory 1994. Washington DC.
Canner, Glenn B., Wayne Passmore, and Dolores Smith. 1993. "Residential Lending to Low-lncome and Minority Families: Evidence from the 1992 HMDA Data." Federal Reserve Bulletin, Vol.80.
Carr, J.H., and l.F. Megbolugbe. 1993. The Federal Reserve Bank of Boston Study on Mortgage Lending Revisited. Fannie Mae Working Paper. Washington DC: FNMA.
Cisneros, Henry G., ed. 1993. Interwoven Destinies: Cities and the Nation. New York: W W. Norton & Co.
Clark, Peggy, and Tracy Huston. 1993. Assisting the Smallest Businesses: Assessing Micro enterprise Development as a Strategy for Boosting Poor Communities. Interim Report of the Self Employment Learning Project. Washington DC: Aspen Institute.
Cohen, Helen S. 1990. "Creating Their Own Jobs! How Far Can Credit Travel? Adapting the Grameen Bank's Self Employment Model." Economic Development and Law Center Report. Spring 1990.
Community Preservation Corporation. 1994. Annual Report. New York:CPC.
Community Reinvestment Act. 12 USC 2901. Title Vll of Public Law 95-128, 91 Stat. 1147.
Cooper, Kenneth J. 1992. "Business Grants: 'Microloans' For Anti-Poverty Program Set." The Washington Post. June 5, 1992.
Drake, Deborah, and Maria Otero. 1992. Alchemists for the Poor: NGO's as Financial Institutions. Monograph Series No.6. Cambridge MA:ACCION Intl.
Dreier, Peter. 1991. "Redlining Cities: How Banks Color Community Development." Challenge, Nov./Dec. 1991.
Fasenfest, David, ed. 1993. Community Economic Development: Policy Formation In The US and UK London:MacMillan.
First Boston Corporation. 1990. Handbook of U.S. Government & Federal Agency Securities & Related Money Market Instruments. 34th ed. Chicago: Probus.
Garwood, Griffith L. 1993. "Statement to the U.S. House Subcommittee on Financial Institutions Supervision, Regulation & Deposit Insurance of the Committee on Banking, Finance & Urban Affairs on Feb. 3. 1993." Federal Reserve Bulletin, April 1993.
Return to Table of Contents Green, Gary P., and Arnold Fleischmann. 1989. "Analyzing Local Strategies for Promoting Economic Development." Policy studies Journal, Spring 1 989.
Gruben, William C. 1990. "Imperfect Information and the Community Reinvestment Act." Federal Reserve Bank of San Francisco. Summer 1990.
Grzywinski, Ronald. 1991. "The New Old-Fashioned Banking." Harvard Business
Review, May-June 1991.
Jepsen, Roger W. 1993. "Credit Unions: Where They Are and Where They Are Going." Tennessee's Business, Vol.4 #1.
King, Marie C., ed. 1994. Thomson Credit Union Directory, 1994. Skokie IL: Thomson Financial Pub., Inc.
LaWare, John P. 1993. "Statement to the U.S. House Subcommittee on Economic Growth & Credit Formation of the Committee on Banking, Finance & Urban
Affairs on Oct. 7, 1993." Federal Reserve Bulletin, Dec. 1993.
Leiterman, Mindy, and Joseph Stillman. 1993. Building Community -- A Report on Social Community Development Initiatives. Chicago:LISC.
Listokin, David, and Stephen Casey. 1980. Mortgage Lending and Race: Conceptual and Analytical Perspectives of the Urban Financing Problem. New Brunswick NJ: Rutgers Univ. Center for Urban Policy Research.
Litan, Robert E. 1991. The Revolution in U.S. Finance. Washington DC: Brookings.
McLenighan, Valjean, and Jean Pogge. 1991. The Business of Self Sufficiency: Microcredit Programs in the United States. Chicago:Woodstock Institute.
Minsky, Hyman P. "Community Development Banks: An Idea in Search of Substance." Challenge, Mar./Apr. 1993.
Munnell, Alicia, Lynne Browne, James McEneaney, and Geoffrey Tootell. 1992. Mortgage Lending in Boston: Interpreting HMDA Data. Federal Reserve Bank of Boston Working Paper No. 92-7. Boston:FRBB.
National Association of Community Development Loan Funds. 1993. Annual Report. Philadelphia:NACDLF.
____. 1995. Community Investment MONITOR. Philadelphia: NACDLF. Winter 1995.
NewYork Law School Community Reinvestment Clearinghouse. "Community Reinvestment and Fair Lending: Into the 21st Century." Conference Reference Materials, Oct. 7, 1994.
Novogratz, Jaqueline. 1992. Hopeful Change: The Potential of Micro enterprise Programs as a Community Revitalization Intervention. NY: Rockefeller Foundation.
Otero, Maria. 1989a. Micro enterprise Assistance Programs: Their Benefits, Costs, and Sustain ability. Discussion Papers Series No. 2. Cambridge MA ACCION Intl
_____.1989b. Breaking Through: The Expansion of Micro enterprise Programs As A Challenge For Non-Profit Institutions. Monograph Series No. 4. Cambridge MA:ACCION Intl.
______, and Elisabeth Rhyne, eds. 1994. The New World of Micro enterprise Finance: Building Healthy Financial Institutions for the Poor. West Harfford CN: Kumarian Press.
Parzen, Julia Ann, and Michael Kieschnick. 1992. Credit Where It's Due: Development Banking for Communities. Philadelphia:Temple Univ. Press.
Rich, Michael J. 1993. Federal Policymaking and the Poor: National Goals, Local Choices, and Distributional Outcomes. Princeton:Princeton Univ. Press.
Return to Table of Contents Rosenthal, Clifford N. 1994. "Credit Unions Throw a Lifeline to the Poor." The New York Times. Letters. Oct. 17., 1994.
Shorebank Advisory Services. 1992. Widening the Window of Opportunity: Strategies for the Evolution of Micro enterprise Loan Funds. Flint M:Charles Stewart Mott Foundation
Shorebank Corporation. 1994. Annual Report. Chicago:Shorebank Corp.
Solomon, Lewis D. 1992. "Micro enterprise: Human Reconstruction in America's Inner Cities." Harvard Journal of Law and Public Policy, Winter 1992. Soto, Enrique, and Lily Zandniapour. 1993. Micro-Enterprise and Women: Findings on the Viability of Self-Employment as a Strategy for Alleviating Poverty. Washington DC: Institute for Women's Policy Research.
Spillenkothen, Richard. 1993. "Statement to the U.S. House Subcommittee on General Oversight, Investigations, & the Resolution of Failed Financial Institutions of the Committee on Banking, Finance and Urban Affairs on May 18, 1993." Federal Reserve Bulletin, July 1993.
Squires, Gregory D., ed. 1992. From Redlining to Reinvestment: Community Responses to Urban Disinvestment. Philadelphia:Temple Univ. Pres
Stearns, Katherine. 1993. Leverage or Loss? Guarantee Funds and Micro enterprise. Monograph Series No. 8. Cambridae MA:ACCION Intl.
Stevens, Judy. 1991 . Lenders of First Resort: Community Development Loan Funds. Chicago:Woodstock Institute.
Sullivan, Mercer. 1993. More Than Housing: Corporations go about Community Development Management and Urban Research. How Community Development Lives and Neighborhoods. Center, Graduate School of Changing Research Policy. NY:The New School For Social Research.
Taibi, Anthony D. 1994. "Banking, Finance, and Community Economic Empowerment: Structural Economic Theory, Procedural Civil Rights, and Substantive Racial Justice." Harvard Law Review, May 1994.
Taub, Richard P. 1988. Community Capitalism. Cambridge: Harvard Business School Press.
Tholin, Kathryn. 1993. Banking On Communities: Community Development Banks in the United States. Chicago:Woodstock Institute.
_____. 1994. Community Development Financial Institutions: Investing in People and Communities. Chicago:Woodstock Institute.
U.S. Congress. House. Committee on Banking, Finance, and Urban Affairs. 1993a. The Bank Enterprise Act's Ability to Catalyze Community Development Banking. Hearings before a subcommittee on General Oversight, Investigations, and the Resolution of Failed Financial Institutions. 103d Cong., 1 st sess., Serial no. 103-35. April 27-May 18, 1993.
Return to Table of Contents _____. 1993b. The Administration's Empowerment Zone and Enterprise Community Proposal. Hearings before a subcommittee on Economic Growth and Credit Formation. 103d Cong., 1 st sess., Serial no. 103-33. May 27 and June 8, 1993.
_____. 1994. Community Development Proposals and CM Reforms. Hearings before a subcommittee on General Oversight, Investigations, and the Resolution of Failed Financial Institutions. 103d Cong., 1st sess., Serial no. 103-65. Sept. 15, 1993.
U.S. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. 1993. Problems in Community Development Banking, Mortgage Lending Discrimination, Reverse Redlining, and Home Equity Lending. Hearings. 103d Cong.,1 st sess.; S. hearing 103-1 37. Feb. 3-24,1 993.
U.S. Congress. Senate. 1994. Riegle Community Development and Regulatory Improvement Act of 1994. Pub. Law 103-325, Sept. 23, 1994.
U.S. Dept. of Housing and Urban Development & U.S. Dept. of Agriculture. 1994. Building Communities: Together. The President's Community Enterprise Board. Guidebook: Federal Programs. May 1995. Washington DC:GPO.
U.S. Department of the Treasury. 1995. "Community Reinvestment Act Regulations: Final Rules." The Federal Register. Washington DC-GPO
Wahid, Abu N.M. , ed. 1993. The Grameen Bank: Poverty Relief in Bangladesh. Boulder CO:Westview Press.
_____. 1994. "The Grameen Bank and Poverty Alleviation In Bangladesh: Theory, Evidence and Limitations." American Journal of Economics & Sociology, Jan. 1994.
Young, Amy E. 1993. "Banking On The Inner City: Reverse Redlining Pays Off For A Network Of Alternative Lenders." Common Cause Magazine, Winter 1993.
Return to Table of Contents