[Federal Register: February 4, 2008 (Volume 73, Number 23)]
[Notices]
[Page 6558-6559]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04fe08-91]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
Request for Public Comments, Community Development Financial
Institutions Program
AGENCY: Community Development Financial Institutions Fund, Department
of the Treasury.
SUMMARY: This document invites comments from the public on certain
issues regarding, for purposes of the Community Development Financial
Institutions (CDFI) Program, the CDFI Fund's certification of entities
as CDFIs, pursuant to the CDFI Program regulations set forth at 12 CFR
1805.201. All materials submitted will be available for public
inspection and copying.
DATES: Written comments should be received on or before March 5, 2008
to be assured of consideration.
ADDRESSES: Comments should be sent by mail to: Certification and
Training Manager, CDFI Fund, U.S. Department of the Treasury, 601 13th
Street, NW., Suite 200 South, Washington, DC 20005; by e-mail to
cdfihelp@cdfi.treas.gov; or by facsimile at (202) 622-7754. This is not
a toll free number.
FOR FURTHER INFORMATION CONTACT: Information regarding the CDFI Fund
and its programs may be downloaded from the CDFI Fund's Web site at
http://www.cdfifund.gov.
SUPPLEMENTARY INFORMATION: The Community Development Banking and
Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.) authorizes
the CDFI Fund to select and provide financial assistance and technical
assistance to eligible applicants through the CDFI Program. Pursuant to
12 U.S.C. 4702(5)(a) and in accordance with regulations set forth at 12
CFR 1805.201, the CDFI Fund certifies eligible entities as CDFIs. The
capitalized terms found in this notice are defined in the CDFI Program
regulations found at 12 CFR part 1805. Through this notice, the CDFI
Fund is seeking comments from the public regarding the CDFI Fund's
certification of organizations as CDFIs. Commentators are encouraged to
consider, at a minimum, the following issues:
(1) Primary Mission Criteria: To be certified as a CDFI, the entity
must have a primary mission of community development (12 CFR
1805.201(b)(1)).
(a) Should the primary mission criteria differ by organization
type? If so, how?
(b)(i) Should the CDFI Fund consider the types of Financial
Products offered by an entity as relevant to the primary mission
criteria? Specifically, should the CDFI Fund review, as part of the
certification process, evidence of the affordability of an entity's
Financial Products to the intended customers?
(ii) How else might the CDFI Fund ensure that CDFI certification is
not given to entities that engage in what are commonly called
``predatory lending practices'' or include so-called ``predatory
lending terms'' in their lending products?
(iii) Should the CDFI Fund require entities to provide Financial
Products at a cost that is at least comparable to market rates or at
some minimum level of affordability to their Target Markets in order to
satisfy the primary mission criteria? If yes, how should market rates
or minimum levels of affordability be determined?
(2) Financing Entity Criteria: To be certified as a CDFI, an
entity's predominant business activity must be the provision, in arms-
length transactions, of Financial Products, Development Services, and/
or other similar financing (12 CFR 1805.201(b)(2)).
(a)(i) What minimum level of financing activity (i.e., number of
transactions, dollar amount of transactions, years of operation, and/or
financing) should the CDFI Fund consider to be acceptable to determine
that an entity is a financing entity?
(ii) How might this minimum level differ among organization types?
(b)(i) Is three (3) months worth of financing capital a reasonable
measure of an entity's ability to sustain its financing activities?
Should the period of time be longer or shorter?
(ii) What other measure(s) should the CDFI Fund use to determine
that an entity can sustain its financing activities?
(c) The CDFI Fund's definition of Financial Products includes
Loans, Equity Investments, and similar financing activities (as
determined by the CDFI Fund) including the purchase of loans originated
by certified CDFIs and the provision of loan guarantees. Should the
CDFI Fund expand this definition? If so, what other products should be
included?
(3) Target Market Criteria: In order to be certified as a CDFI, an
entity must serve a Target Market consisting of one or more Investment
Areas and/or Targeted Populations (12 CFR 1805.201(b)(3)).
(a) Are the CDFI Fund's Target Market options (Investment Area, Low
Income Target Population, and Other Targeted Population) clear? If not,
how can the
[[Page 6559]]
CDFI Fund make the options more clear?
(b) Should a certification applicant be required to demonstrate a
track record of serving the requested Target Market? If so, what is an
appropriate minimum time-frame to establish such a track record? Please
provide reasons to support your response.
(c) Should the CDFI Fund allow different types of organizations to
meet the Target Market requirement at different benchmarks (i.e.,
percentage of activities directed toward the Target Market could
deviate from the required 60 percent level for certain types of
organizations)? If so, what level of activity would be acceptable for
specific organization types?
(c) Should certification applicants be required to have a physical
presence in their Target Markets (i.e., a branch, an office, local
partners)? If so, what is an acceptable minimum level of presence?
(4) Accountability Criteria: To be certified as a CDFI, an entity
must maintain accountability to residents of its Target Market through
representation on its governing board or otherwise (12 CFR
1805.201(b)(5)).
(a) (i) How many governing and/or advisory board members
representing a Target Market should the CDFI Fund require to determine
that an entity is accountable to its Target Market?
(ii) How should the geographic size, population density of the
Target Market, and/or board type (governing vs. advisory) factor into
the number of representative board members necessary to demonstrate
accountability to a Target Market?
(b) Should the CDFI Fund expand or restrict the ways that board
members can be deemed to be representative of a Target Market?
(c) (i) Should the CDFI Fund continue to allow certification
applicants to demonstrate accountability to Target Markets through
``other mechanisms'' (i.e. annual meetings, surveys)?
(ii) If so, what additional types of mechanisms should be
considered to demonstrate accountability?
(5) Development Services Criteria: To be certified as a CDFI, an
entity must provide Development Services in conjunction with its
Financial Products, either directly or through an Affiliate, or through
contract with another provider (12 CFR 1805.201(b)(4)).
(a) What minimum level of Development Services should be expected
of a CDFI (i.e. is one-on-one counseling enough or should training be
more formal/standardized?)?
(b) Should the CDFI Fund require an entity to provide Development
Services that are linked to each Financial Product that it offers?
(c) Should Development Services include broad efforts to increase
financial education and literacy within an entity's Target Market?
(6) Non-Governmental Entity Criteria: To be certified as a CDFI, an
entity cannot be an agency or instrumentality of the United States, or
any State or political subdivision thereof. An entity that is created
by, or that receives substantial assistance from, one or more
government entities may be a CDFI provided it is not controlled by such
entities and maintains independent decision-making power over its
activities (12 CFR 1805.201(b)(6)).
(a) What minimal levels of government support for an entity's
operations (e.g., funding and capitalization) or government involvement
in an entity's lending or investment decisions (e.g., underwriting
criteria or loan approval) should be considered acceptable for
certification?
(b) Should governmental ``operations support'' and government
``involvement in lending and investment decisions'' be considered
separately or should evidence of both be required in order to deem an
entity as having failed to satisfy the non-governmental entity
criteria?
(7) CDFI Certification Application Process:
(a) Should an electronic, web-based CDFI certification application
process be implemented and, if so, should paper applications continue
to be accepted?
(b) (i) Should CDFI certification status extend for a fixed period
of time before it expires? If so, is three (3) years an appropriate
duration?
(ii) Should CDFI certification be continued indefinitely if the
certified CDFI does not request an award from the CDFI Fund?
(iii) Is there any policy justification to designate different
certification periods for different types of organizations? If so, how
long should certification periods be for specific types of
organizations?
(c) What should be the primary components of a recertification
process?
(8) General: What other changes could the CDFI Fund make to improve
the CDFI certification process that has not been addressed in the
preceding questions?
Authority: 12 U.S.C. 4703, 4703 note, 4704, 4706, 4707, 4717; 12
CFR part 1805.
Dated: January 28, 2008.
Donna J. Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. E8-2008 Filed 2-1-08; 8:45 am]
BILLING CODE 4810-70-P