>> the supreme court is considering challenges to the administration's vaccine mandate for health care workers. you can also go to c-span.org or use our free video app c-span now.

>> next, on c-span, a hearing about organizations that provide home loans in low-income communities and the people who lack access to financing. the senate banking housing and urban affairs hearing was chaired by tina smith. communities when it comes to accessing capital and the financial system. the covid-19 pandemic has not been the great equalizer. it hasn't laid bare the disparities in our society that

existed before the pandemic. too often it is black, brown and indigenous families that faced the most significant burdens. the economic disparities did not start during the pandemic. according to the federal reserve, as of 2019, a typical black family's net worth was just 15% of a typical white family's network. a typical hispanic families net worth was about 19% of a white family. and the typical net worth for native american families is also just a fraction of the typical white family. while there were many causes for this great iniquity, one factor is a lack of access to capital and financial services. for people of color, indigenous communities and rural places. the federal agency that oversees the programs when it was established in 1994 --

they were more than a thousand models that were not imagined when the fund was first established. they played a critical role in bringing financial services to a wide variety of underserved communities from urban areas to small towns and tribal lands. for instance, the development center health fund -- there were that 450 african small businesses. the indian company -- forgive me, it made a loan of one million two allow them to expand their land by about 10%. i appreciated the opportunity to visit with them that summer and learn more about the project. in 2018, i visited the university enterprise lab which was funded by this with the new

market tax credit program. those funds helped expand cutting-edge. congress has looked city effective community development. this provides tax incentives to allow them to work on economic development projects and economically distressed areas. i am glad to be a supporter of it. during the great recession, senator menendez offered agitation to establish the bond

guarantee program. earlier this week, the senator introduced legislation to make this permanent and make it more excess about to smaller one to me want to purchase pay. i am looking forward to hearing from our witnesses today about our our legislation may make a difference for community development. congress set aside $25 billion of lending to distribute because they have relationships with many communities that angst and credit unions were not able to reach. they made more than 100,000 ppp loans. that was critical to helping thousands of small businesses stay afloat.

in the bipartisan package that we connected at the end of 2020, congress made this historic investment. as a result of that program, 27 received grants totaling $38 million. the funds will be invested in our state to support new lending and services. i know that -- i look forward to hearing from our witnesses today about how that funding is making a difference in their community's. i would like to thank mike for being such a good partner in planning and organizing this hearing. this is a hearing where we tend to focus on what we can find agreement on and where we can find common ground and approach this from a perspective of solutions. that is very important.

especially in supporting economic development and access to capital. in the indigenous communities that both of our states share. as i mentioned before, yesterday we joined together to gather elation to update the bond guarantee program to make it more available. we have also done legislation to support access to mortgages for native americans in a partnership. i am hopeful that today's hearing will help us identify additional areas where we can work together and pay the path to advancing these legislations. thank you so much for your partnership and you are now recognized, centered around -- senator rounds. >> while i have appreciated the

opportunity to work directly with you and your team, i think this is the way the legislative process should work and i appreciated your openness to having these discussions. being an item that can be moved forward from the subcommittee and making some very positive changes throughout the midwest and hopefully across the rest of the country. i thank you for your leadership and your interest in cooperating and working together. i also want to thank our witnesses. i look forward to hearing from all of you.

it is because of these institutions that many can launch a business that will bring much-needed jobs to a rural community. today, however, i mainly want to focus my remarks on native populations as well as the challenges they still face. they are anchored in local culture and are passionate about creating opportunities for long-term growth. as members of the communities themselves, members know how to bridge the gap. they also play an important role. this results in new nato-led

businesses, opportunities for under her ship and additional jobs. native cdf eyes -- cdfi's serve this population. many of whom are the first in their generation to do so and begin a journey toward financial stability. a recent study found that trust between a borrower is critical for successful loan and many cfi's design their services to include a cultural element so they can better build that trust by providing in the actual workshops and integrated cultural values. researchers also found that establishing tdfi's near these

reservations can include credit outcomes. since they are able to tailor their programs to their specific communities, they find more success. the minneapolis fed reporting that one native step member per 1000 residents leads on average to a 35-point increase on the score for individuals who have low credit worthiness. even though they are you to be effective, they still face challenges -- adequate capital access continues to be a problem, and demand in native areas is outpacing supply. the chair and i have worked on several pieces of legislation to increase access to the

much-needed capital. last year we introduced the american rural homeownership improvement pact, which would expand a 502 lending pilot program to employ loans to borrowers. sandra smith and i introduced legislation today that would lower the minimum bonds offered by the bond guarantee program from $100 million to $25 million in order to increase access to smaller cdfi's like native cdfi 's. these are a few of the ways we have tried to address this problem, and i look forward to exploring others during this hearing. again, we welcome you all here today to our first subcommittee hearing of 2022, and i look forward to hearing from my witnesses on native cdfi's and traditional cdfi's. thank you, and thank you madam

chair. sen. smith: thank you, senator rounds. i'm going to introduce our witnesses. i'm grateful to all of you for joining us today. i will introduce all three of you and then turned to each of you to make your opening statements. i would like to welcome john holdsclaw, president of the cdfi coalition and executive vice president of strategic initiatives in washington, d.c. i'm delighted to welcome frank altman, a founder and ceo at community investment fund usa based in my hometown of minneapolis, minnesota. welcome, frank. also, it is wonderful to have joined us today lakota vogel, the director of four bands community fund in eagle butte, south dakota.

thanks to all of you for your willingness to speak today, and before your opening statements, i have a few reminders. once you start speaking, there will be a slight delay before you are displayed on the screen, and to minimize any background noise, please click the mute button until it is your turn to speak and ask questions. you should all have one plot on your screen showing how much time you have for many. for witnesses, you have five minutes for your opening statements commend your written statements will be made part of the record. for senators, five-minute clock applies for your questions. when you have 30 seconds remaining, a little bell will ring to remind you that your time is expired and it will ring when your time has expired. if there is any technology issue, we will move to the next witness or senator until it gets resolved. to simple if i the speaking order process for senators,

senator rounds and i have decided to go for seniority in this hearing, and we will proceed to subcommittee members by security and then turned to non-subcommittee members to ask questions. i will now turn to mr. holdsclaw for five minutes for your opening statement. mr. holdsclaw: thank you. chairwoman smith, senator rounds, members of the subcommittee, my name is john holdsclaw iv, and i'm the president of the cdfi coalition at the national cooperative bank. thank you for this opportunity today to testify on the cdfi fund and the success of cdfi's in delivering financial services to low income, urban, rural, and native communities. the cdfi coalition is made up of 150 organizations including loan funds, community develop and corporations, micro lenders, native american organizations, and credit unions.

the fund was established in 1994 and emerged as a key policy apparatus for revitalizing disadvantaged communities, especially those hit very hard during the covid pandemic could however before the pandemic, low income communities, rural, tribal, communities of color, faces significant obstacles in accessing services. today the fund has more than 1300 certified cdfi's are thought to contribute providing community development and lending services. these cdfi's leverage $12 in private capital for every dollar in federal support. in fy22, the cdfi fund assistance awards unleashed $39 billion in loans and investments to one out of 25,000 businesses-- 125,000 businesses.

cdfi's and made 1.6 in loans and investments. in regards to the paycheck protection plan, according to sba, through may 2020, cdfi's, or financial institutions including cdfi's, made 1.2 million ppp loans, 20% of all the loans. it was 21,000 compared to 41,000 across all other classes. 78% of all community financial institution ppp loans went to businesses requesting less than joint 50,000. -- 250,000. moreover, many of those permitted to businesses in rural communities, keeping with the 6.6% of all loans that went to rural businesses. with the recent growth in industry, it presents an

opportunity and challenges. the federal government made an unprecedented investment in cdfi 's over the past several years, with the hope of expanding its impact. congress and the cdfi fund can do more to scale the cdfi movement while ensuring that cdfi's maintain their role as trusted mission to lenders and underserved communities. the cdfi coalition urges congress to provide $1 billion in annual preparations for cdfi assistance programs through the cdfi fund. the coalition urges congress to invest more by increasing the annual authorization level to $1 billion for the cdfi fund. we believe this will result in the financing of an additional 100,000 portable housing units, thousands of investments in childcare centers and community facilities, make 2 million consumer and homeownership

loans, and hundreds and thousands of investments in businesses in targeted areas. the fund encourages congress to build the administrative capacity of the fund to sustain the recent momentum and growth in the industry. congress should provide additional recourses to the agency to administer a growing portfolio of financial assistance awards, bonds, and tax credits. we also support the bond guarantee -- thank you, senator smith and senator rounds -- that was introduced yesterday, an extension and other improvements contained in that legislation have the potential to further prompt revitalization in distressed and rural communities. thank you again for the opportunity to be here today to talk about the impact of community financial institutions . i welcome the opportunity to answer any questions that you have. thank you. sen. smith: thank you so much.

mr. altman. [indiscernible] mr. altman: start again. thank you, chair smith, senator rounds, dissing which members of the subcommittee i'm pleased to discuss the role of cdfi's and supporting underserved communities. i am frank altman, cofounder of the community investment fund, based in minneapolis, whose mission is to improve lies and strength in communities with innovative financial solutions. we were certified as a cdfi in a 2009. we have been active as an organization since 1988, so we have been around for more than 30 years. crf has been the beneficiary of six national business awards and the rapid response grant. we have received 919,500,000

in allocations since the beginning of the program, and we have issued $940 million in bonds on behalf of 8 cdfi's and bond guarantee programs. since our founding we have deployed more than $3.5 billion serving more than 2.3 million people to small businesses in more than 1000 mostly low income communities in all 50 states and the district of columbia. early on in the response to the need for liquidity or revolving loan funds, organizations lending in these communities, we greeted the first secondary market for loans and issued the first asset-backed securities collateralized these assets. our mission was to connect community-based lenders in the public capital markets.

we continue to work toward that effort. over the years we have funded more than 9000 small business loans, businesses owned by women and people of color, and her deep expertise in small business lending led to an sba on bank license. today i want to focus my remarks particularly on both national and minnesota, what we have learned. crf has a long history of working with more than 215 cdfi 's and finance agencies over the years, both nationally and in the twin cities. in minneapolis we made more than 100 subordinate loans to support small businesses along like frank than avenue and primarily in the philips neighborhoods. we did this in partnership with local banks and other cdfi's,

and have joint efforts to revitalize neighborhoods resulted in the 60% decline in crime from 1998 to 2009 and rising property values. this laid the foundation for a major development project, a former sears distribution center, long vacant, vacant for more than 10 years. 2 million square feet. very daunting project. the city, working with the city and the strategies the city had, crf and two other cdfi's were able to provide tax credits to redevelop this building to a mixed-use building, including the headquarters -- bringing the headquarters of a major nonprofit national health care

system into low income neighborhoods. in the same neighborhood we used tax credits to finance banyan at the midtown exchange. banyan supports early education and child care and afterschool programs in a low-income community sadly, the murder of george floyd raised much of the progress we made, but we stand ready to support in rebuilding this area and others with funds we have received from cfi fund and others. the pandemic is -- has caused -- out of time, sorry. thank you very much. sen. smith: thank you, mr. altman. we will have the chance to hear the rest of your comments, i'm sure. next we will hear from ms.

vogel. ms. vogel: thank you, chairwoman smith, ranking member rounds, members of the subcommittee. i'm honored to be included as a voice in this hearing for cdfi's serving underestimated communities across the nation. my name is lakota vogel. born and based on a ranch in south dakota. i'm the executive director of the four bands community fund, which started serving a reservation and central south dakota and expended across the entire state. i am on the executive committee of a coalition and member of the mountain plains native coalition. i'm here to show the perspective of on the ground leaders in the city which spans 69 separate organizations across 27 states. the core of our mission and purpose of our program is aimed

at leveling inequities stemming for an historic lack of investment and access to capital as well as noninclusive policies in the communities we serve. with over two decades of experience, four bands community fund has improved our products and services to successfully deploy millions of dollars across the state. we have integrated approach and landing, which ranking member rounds mentioned, with relationship building and learning with loan products. our programs are to revive a traditional culture and promotes all sufficiency by focusing on two areas, entrepreneurship and homeownership. within the entrepreneurship space, four bands offers a comprehensive business training program along with coaching. we have several products to help entrepreneurs access capital, $250,000, and they can use that for inventory, improvements, any commercial purpose.

we also operate a business for physical space in addition to our entrepreneur programming in the community of eagle butte, south dakota. the average is the female head of household who dreams of starting in the service industry that doesn't require a lot of study p it could be--starting capital. it could be a restaurant, a hair salon. they have more difficulty accessing capital from financial institutions because of the small dollar nature and small balance sheet. four bands has deployed $200 million to the small business sector -- i wish to hundred million dollars -- $20 million to the small business sector, resulting in the expansion of 300 native businesses across the state. we can probably say we have innovation and partners like crf , we did not lose one small business during the pandemic across the state that was within our portfolio.

we focus on consumer and homeownership. a unique challenge within our communities is invisible credit histories. fortunate to have it for financial institutions serving the reservation, but only one of them, the credit union, reports to the credit bureau. we have a generation of borrowers utilizing a debt tool for decades at the local financial institutions and they remain invisible, and it is not due to any individual choices or behavior, but it is due to institutional decisions. we began reporting to the credit bureau from 2010 list of our community mindedness has primed the market for homeownership. as the balance sheet group, we were able to offer mortgage products in many 19 in partnership with -- in 2019 in partnership with usda. we were able to close 8 mortgages and a total of 42 mortgages within 1.5 years.

my argument nations are civil -- advanced native american role homeownership improvement act. thank you to chairwoman smith and ranking them around for cosponsoring this legislation. --ranking member rounds for cosponsoring this legislation. second recommendation i have is to increase cdfi's appropriation to meet the need. ouro program needs are increasing across the nation, and the annual preparations have remained stagnant since 2014. all this is to say that it is chronically undercapitalized. we are part of the communities we serve. we sit on the daycare board of directors desperately trying to keep these programs running. and they are woven into the fabric of the community in every aspect of our clients' financial life. there is no comparison to sitting across from our clients at tax time and assessing their

earnings for the year and planning for the future. it is a sounding board for many of the financial decisions they make. we believe how you perceive is how you proceed. we perceive opportunities because it is intricate and woven into the success of our neighbors. thank you for the opportunity to testify. sen. smith: thank you, is vogel. i appreciate all your testimony so much. we will turn to the first round of questions, and i will begin. i'd like to first drill down a little bit on cdfi bond guarantee programs. we noted senator menendez, who is joining us today, started back in the beginning -- during the great recession, and yesterday senator rounds and i introduced a bill that would update the bond guarantee program. our bill would reduce the program's loan size requirements

so it could be more accessible to smaller cdfi's and smaller community development projects. mr. altman, let me turn to you first. can you share some examples of how the changes that senator rounds and i are proposing might get more capital into the hands of smaller cdfi's and into the communities that they serve? mr. altman: thank you, chairwoman smith. the program in the cdfi -- it has only been used by about 26 cdfi's, and the biggest barrier to utilization has been the need to come together as a group, $100 million bond, or to be a large enough organization that the balance sheet can support $100 million in debt. that has limited the cdfi to the largest cdfi's in the country,

and cases -- it is difficult, because if one cdfi in the group decides it has to --you can make the program inaccessible for all the cdfi's coming together. by lowering the bonsai's we believe that many more cdfi --bonded size can we believe that many more cdfi's would be able to access this program. it provides very low cost, long-term debt to the balance sheets of the cdfi's, so it is used to match long-term assets, particularly in affordable housing, daycare, and other facilities that need long-term finance. it is a very powerful program if you can pull it together in a slightly different way. sen. smith: thank you very much. ms. vogel, would you like to comment on this as well? ms. vogel: you know, honestly,

we support -- the cdfi industry is great and that we all support one another, and i trust frank and john with the advocacy. as the person on the ground doing the work, it is nice to have the big brothers up there. we definitely support the legislation that has been advanced by you and ranking member rounds. we are looking for to learning more from crf and the cdfi coalition about how we can utilize the program, but it sounds like a win to me. sen. smith: thank you so much. let me stay with you, ms. vogel. senator rounds mentioned that he and i have introduced legislation to make permanent programs that would expand mortgages to tribal communities. it is based on a pallet usda is -- pilot usda is doing in south

dakota. i know you are involved in this pilot program. can you talk to us about how the pilot program helps to serve the cheyenne and what you see as the community benefit of this strategy? ms. vogel: as i mentioned before, there have not been for a long time. if there are mortgages, is wrapped into a personal loan, so the usda capital allows us to develop mortgage products for the market. i hate to even say the word "mortgage" because it's first such demand where we have 1800 demands for mortgage products. the longer term debt capital to begin serving the market and for homeownership and without that, we would not have been able to deploy the 42 mortgages we closed in the year and a half

. sen. smith: thank you so much. i appreciate the partnership with senator rounds on this. i will turn the questioning to senator rounds. sen. rounds: thank you, madam chair. ms. vogel, i'm going to continue with you in just a minute. as the senator has indicated, i really think it is important for doc about the usda's 502 program, and the reason why it was successful there was in north-central south dakota, you are talking about a rural area and an area which is on a reservation, which means -- it is in tribal trusts. is that one of the reasons why looking for an understanding of what it means to be able to get informed on how you actually get to the land and so forth?

can you talk about that in terms of how critical this particular 502 lending program is and how it might impact areas as well? ms. vogel: i think it goes back to relationship lending. while tribal trust has its complexities, it is really about the cdfi's alongside their customers to begin the paperwork. instead of me remaining on my desk and sending my clients down the path, we talk with them through that process. the relationships we hold on the ground, it is a little trick of the trade, and the importance of us being here and understanding what it means to develop communities. on the ground is important, understanding that homeownership is important. it is complex, but anybody can

do it if you are to invest in communities. sen. rounds: the community fund, your organization -- i think there are a lot of folks out there who don't understand how strong you really are. how many folks actually work -- how many lenders do you have, how many staff members do you have there? ms. vogel: i have 8 staff members, 9 including myself, but 3 that are working on the lending side. we offer technical assistance and we have more teams focusing on education within the community. sen. rounds: we talked about first-generation individuals getting involved in financial institutions and lending. can you share a little bit about the challenges of moving from a cash economy to where you have a relationship with a lender and the expertise and the walking through the steps of what you do

for individual members or families when they calm in? an average family in terms of -- they are in the ag community or whatever, and they are looking for a way to get into a home or start a business. what do you find in terms of the challenges they face? ms. vogel: the first thing is just lack of infrastructure. you have a daycare or headstart teacher, grandmother caring for three children, she walks into the building and says, "i want to buy a home, michael is to retire and take my three grandchildren--my goal is to retire and take my three grand children." the hard part is getting electric, water, sewer, inc. like that. what we are asking individuals from rural economies to do is to develop the infrastructure needed to grow the economy. it is difficult for them because that is -- generally the infrastructure improvements are not included in the traditional financial institutions, so cdfi 's can't view those as part of

the-- can view those as part of the value. it is the small town relationship, but our average is $27,000, half of what the state of south dakota is earning. a lot of them need to be brought into mainstream financial institutions and that takes money and time. funding the cdfi fund so that the money can trickle out to us and support our administrative costs and the services needed within our community. sen. rounds: i know i'm going to run out of time, but i want to get one more question for sure. private companies with larger banks are partnering with cdfi's . communities have got first-generation borrowers. can you discuss the larger financial institutions like wells fargo in south dakota

partnering with cdfi's like yours to increase access to capital? ms. vogel: yes, that was mentioned in john's testimony saying we leverage every dollar of federal investment is leveraged at least 12 times. we go through corporate investments like wells fargo to build back the business economies and community economies we are operating within. sen. rounds: great. you would have a partner there. this is an opportunity to perhaps get more of the private lenders actively involved where they literally find a path forward right now. ms. vogel: and foundations. historic lack of investment in philanthropy, so we need philanthropy and corporations to step up. sen. rounds: thank you. thank you, madam chair. once again, thanks for putting together this particular hearing today. i think this is really important. this is one area where we absolutely can make a difference, and this is bipartisan in nature. i really do appreciate your

leadership on this and your interest in finding a path forward that would make a difference in our rural areas. sen. smith: thank you so much, senator rounds. i will turn to senator reed. sen. reed: thank you so much, and thank you for your leadership on this issue that is vitally important. ms. vogel, the cheyenne people who are un-banked, they are at the mercy many times of payday lenders. can you share your expense with providing sustainable, affordable funds to members of the community? ms. vogel: yes, i can. thank you, senator. a loan at 11% interest for some time now, a lower interest rate, but we were involved in an

initiative to cap the interest rate at 36%, which was successfully passed. we have not seen payday lenders show up, and the credit histories of our clients have come through. they've successfully been able to access other products to meet the short-term cash needs for the household. it helped us to have the capped interest rate. sen. reed: and it also indicates that you are able to function as well as commercial banks in the state with the interest cap. is that accurate? ms. vogel: yes. it is a business decision just like any other decision. you have other products that can offset the cost for the ministry to expense--administrative expense to offer an important product for the community. sen. reed: under the military lending act, 36% interest limit

on loans to service members, the legislation now would extend that to everyone. what impact would that have nationwide? i presume for your experience in south dakota, very progressive south dakota, it would not have an adverse impact. ms. vogel: i don't think it would have an adverse impact. i believe in american innovation, and if you cap the interest rate community products safe and affordable for the families that are most vulnerable and they would be innovative products that could fill the gaps. sen. reed: thank you very much, and thank you for your work. indeed, all of you, for your great work. one of the impressions i had about the first round of ppp is that the big banks, they first got the money to the clients and the small business men women, particularly minority

communities -- many restaurants, we had relationships with these banks for years, couldn't get anything out. and that is why one of the reasons the second time around we made sure cdfi had a role in distribution and the money. can you talk about that? we made a decisive impact on getting money where it was needed to small business people. can you comment, please? mr. holdsclaw: shorthand, senator, and thank you for the question-- sure can, senator, and thank you for the question. there is disparity with the larger banks in the first tranche and associations across the industry, to give a pot of money for cdfi's. i think what you saw, as i mentioned in my testimony, the loan sizes went way below the average, but also use some more

black and brown borrowers. for one example, self-help credit union based in north carolina, 63% of all of their ppp loans went to businesses of color, owned by people of color. i think he was effective to give an alternative to the larger banks -- i'm not knocking banks -- but to give them the ability to be able to access the ppp program, especially in those communities that were hardest hit that were black and brown. i'm happy we were able to advocate on that i'm happy that cdfi's were able to stand up at a crucial time to support businesses that did not get that in the first conch. -- first tranche. sen. reed: i think the lesson is that if we are doing assistance to small business, cdfi's have to be a big part.

just getting into a larger institution will not get the money to where it needs to be . thank you. sen. smith: thank you, senator reed. we will now turn to senator daines. sen. daines: i'm excited for the subcommittee hearing because the cdfi's have played a very big role in my home state of montana. they continue to play a vital role in supporting a lot of our underserved communities across our state. in fact, you look at the numbers in montana, cdfi's have invested more than $218 million. that spans over 4000 loans. cdfi's in my home state, which operate primarily in montana, idaho, wyoming, they have got a

really strong track record of boosting economic growth and, importantly, creating great jobs. and particularly the new markets tax credit, which provides credit assistance for entities that make investments in our lower-income communities. in fact, we can point to a new ywca in missoula, which i happened to tour back in august 2020. we have a new wellness center in the indian reservation. consequently, i've seen firsthand that the new markets tax credit, it works. i strongly support making it permanent and would reach out to michael except both sides to work together to find-- my colleagues on both sides to work together to find permanence. one of the festering parts of washington, d.c., is the temporary entry of--temporary

nature of policies that are good policies. we recently in congress extended the nmpc through 2025 to provide much-needed certainty on those who utilize and rely on this incentive. congress has extended that so many times that at this point we should agree, let's just make the temporary -- let's make it permanent. i have a question for the whole panel. in your mind, what would be some of the benefits of making the credit permanent, and do you think it would make the credit even more effective? mr. holdsclaw, why don't you start with your response? mr. holdsclaw: thank you, senator. like you stated, in the state of montana, and across the country, the new markets tax credit

proved to be vitally successful, and i concur review on make -- i concur with you on making it permanent. you see every year with cdfi's applying for the program, the need is there. it is a perfect example of a private-public partnership where outside others can be combined with the expertise of an entity to impact communities. definitely strongly agree in making it permanent and increasing the allocation for the new markets tax credit program, and the new markets tax credit collision is doing amazing work advocating on their behalf. i appreciate the support. i defer to the other panels. sen. daines: ms. vogel, do you have a thought on that? ms. vogel: i believe my time to mr. all--i will be my time to

mr. allman. he has the experienced. mr. altman: i was the head of the new markets program in 2000 so we have been involved over a long time to make this successful. it has never been plagued with scandal. it has been incredibly effective. i appreciate your statements, senator. sen. daines: thank you. mr. altman: a couple of other points i would make is that it should be indexed for inflation, permanency. it should be made permanent now while the opportunity is here. i know there has been some discussion about 2025, and leaders should make it permanent. it should be widely available.

sen. daines: well, thank you. ms. vogel, i know you spent a lot of time working in indian country. any thoughts you want to share about what has worked and hasn't worked to increase cdfi investment? ms. vogel: just quickly on the market text credits, a lot of us innovate on state levels to address that. it hasn't worked successfully, so i would encourage us all to take a deep look at what are the systemic issues going on with the program that are inhibiting investment. i could take a team at the--that could take a team at the cdfi fund. there are eyes that need to be put on it, taking a look at things. we need to be involved in that and taking a look at betty's. --look at things. sen. daines: very hopeful, -chairman smith--very helpful comment.

chairman smith, i'm out of time. sen. smith: i will turn to senator menendez. sen. menendez: thank you, madam chair. through the pandemic we saw that minority and small businesses were hit particularly hard hit. we saw funding go not to the businesses most affected, but w hite-owned businesses with pre-existing relationships with banks. i would like to ask mr. altman and ms. vogel, how did cdfi's privatized lending to the hardest hit small businesses, particularly minority- and woman-owned businesses? mr. altman: i will start. the program brought out the best in cdfi's. we were able to network with a number of cdfi's that did not have business lending capacity or were not eligible in the first round.

we were able to mount the ppp program from day one and worked together around the country toi refer borrowers to us. and we worked together. and then we did the final lending. that led to 700 and the dollars in --$700 million in ppp loans. and the immediate loan size of those business loans was $21,000. really working with the moment public companies and the small businesses at the two thirds of the loans we made where we had information as to the racial characteristics or businesses on by people of color or women.

the cdfi industry was able to partner with others. because the program was so important, we were able to raise hundreds of millions of dollars in credit facilities from large banks to fund the activity we did. ms. vogel: you mind if i -- ok, thank you for the question. it was first a lot of panic when we found out about the ppp program and the inability to access funds to the borrowers. the first instinct was to refer to financial institutions, many of whom were not serving borrower's outside their portfolios. we had to scramble and find a partner because crf had created this tool.

we look for partners that were giving us a little bit of a kickback, because we spent a lot of time packaging the loans and working with borrowers in getting the balance sheet straight, and crf was generous enough to help. many wanted without any support back to the crf, which was festering. we are on the ground, to get the resources in the hands of community members that needed the most unsuccessfully did it through partnerships with crf. sen. daines: well-- sen. menendez: just for the important work, about the effort to establish the cdfi bond program 10 years ago. that allows cfi's to access long-term low-cost to jump start economic growth and community development, all at no cost to

the taxpayers. mr. holdsclaw, you noted in your testimony that the program has $1.3 billion in affordable financing for community facilities, nonprofits, commercial real estate, other community development projects. can you explain to the community in more detail how the program helps these projects after they come to light? mr. holdsclaw: thank you, senator, and thank you for your support of that 10 years ago. i think the bond guarantee program as provided an opportunity for the folks who have the desired access to garner or capital. it's a game changer from the standpoint of we do want to encourage folks, or encourage them to come down and expanded to more individuals. i think the way the program is

structured allows more cdfis, the ones able to access the program, another avenue for the programs already out there that already exist. to go to 25 mini dollars ---$25 million, $100 million, only expanding it for more folks to access the program. sen. menendez: one last question -- would it be fair to say that if the cdfi bond program had not existed, some of these projects wouldn't get off the ground? i have other questions i will submit for the record. sen. smith: thank you so much from sender menendez. unless senator tester is with us -- i think he is not -- we will go to senator cortez masto from nevada. sen. cortez masto: thank you,

madam chair, thank you for having this hearing. so important and i appreciate the comments from the panel members today from all the work you are doing. let me start, mr. holdsclaw and mr. altman, let me talk about the housing and recovery economic act. we know congress allowed financial institutions to become members of the home loan banks. mr. holdsclaw, as the impact of providing the secondary market for the federal home loan banks? mr. holdsclaw: thank you, senator. great question. it's obvious that the number of cdfi's who have joined the federal home loan banking system has increased. you look at 2011, you had 8. you look at 2021, you had 67. much like cdfi's do as well.

through this membership, as we talked about through the testimony, cdfi's are going to look for affordable sources of capital, and i think the federal home loan system has given our members or our industry on-demand capital that they need, and i think that cdfi's are able to take this capital and use the funding source for mortgage products and moderate income communities. i think that as the banks offer cdfi's to secure these obligations come i think you are going to see the number rise as the fight for capital is going to become more apparent as they move on. cdfi's becoming shareholders of the bank, they can participate in various programs that the federal home loan banks provide -- for general, the grant

programs that support disaster relief for homebuyers. i think as time goes on, those numbers will increase. sen. cortez masto: no, i think that is great, and that is a positive. wonderful to hear the benefits. and i also know that unfortunately, the law did not commit financial institutions to join as community financial institutions, and that had an impact. mr. altman, i appreciate the reinvestment fund support to allow cdfi's to pledge small businesses and community development and loans to receive advancements.; mr. altman, how would the opportunity to pledge noncapital loans affect your institution? mr. altman: it would be very,

very helpful. we looked over time since the opportunity to become a member of the federal home loan bank, we decided that we couldn't because of the requirements, just not having the right collateral to meet the standards to get a significant -- we have got elsewhere for liquidity. we have supported membership by investments made by the federal bank of chicago. but cdfi membership would be greatly enhanced by the bills that have been introduced. sen. cortez masto: my understanding is in 2008, it was a drafting error rather than the decision for it to occur. i encourage support of my

proposal to allow nondepository cdfi's to pursue the same collateral as other financial institutions. for the chairwoman, i would request permission to place into the record of the 2015 gao reports on federal home loan banks, collateral requirement discourage communities for institutions to seek numbers are. sen. smith: so ordered. sen. cortez masto: thank. i know i don't have that much time left. i think we all -- this is a great opportunity for bipartisan work and greater investment in community development and financial institutions. unfortunately, i am aware that entities exist unevenly across the nation. there is only one treasury-certified cdfi in nevada. the past 30 years we have had only 8 for a nevada-based cdfi.

my question to mr. holdsclaw is how can the cdfi coalition assist the development of cdfi's in states like nevada? what can we do to bring more of those into a community that is underserved? mr. holdsclaw: senator, with the time i have left, i obviously advocate for more technical assistance dollars for emerging cdfis in nevada and encourage cdfi programs and last but not least, there are webinars, there are things that emerging cdfi's can do. we at the coalition have a lot of western-based rural cdfi members and i'm more than happy to talk to staff to bring folks together and put you all in touch. sen. cortez masto: thank you, and i'm looking for to that. i know about the technical assistance funds, different ways

we can get you your support and innovate ideas about how we do this. thank you, everyone. sen. smith: thank you very much. senator van hollen. sen. van hollen: thank you, madam chair, and i want to thank you and senator rounds for putting this together. all the panelists, thank you for your input commend it is good to see my colleague senator warner also it was good to work with him and others in providing the big bump up to cdfi's as part of the bill we passed last december. i have questions regarding the status of the rollout. but first, i also served on the appropriations committee and i chair the subcommittee that oversees appropriations through the department of treasury. we have been working on a bipartisan basis to increase funding for cdfi's, given the critical role that they play in economic development at the

humidity level. we unveiled a proposed budget for this fiscal year that we are now in, fiscal year 2022, that would increase the cdfi allocation by $90 billion, taking into $360 million from the current amount of $270 million. my first question to mr. mr. holdsclaw is do you agree that cdfi's have the capacity to absorb this additional funding? and what will be the consequences if we are not able to provide the additional funding, straight-line cdfi funding at current levels? mr. holdsclaw: thank you you, senator. i think covid has proven, if nothing else, what cdfi's are able to do is that cdfi's can be

the first line of financial defense for underserved communities across the country. i feel like i'm thankful for your support of the appropriation levels that cdfi's would be able to absorb that increased amount. i think the performance during covid has been shown that in regards to the second part of the question, obviously all cdfi 's are concerned about access to capital and production. the need is so great that i would have a hard time finding it was necessarily detrimental to those types of funds. also, senator, i don't know if you were here during my testimony, but i talked about the only money going to cdfis, but having enough administrative support internally to do with the demands of advocates for

cdfi's going on right now as well as the work of allocation of 30's from last year. they're very shortstaffed. cdfi's need a lot of that money. there is a desire from the coalition standpoint for us to support the cdfi fun from the ministry of standpoint. --from the administrative standpoint. sen. van hollen: i appreciate that, and one thing we want to do his work with you and your members to make sure we do that. we have got to support the folks at treasury and the folks in the field. i referred to those two big programs that are still in the process, the emergency capital investment program and the emergency support and minority lending program. based on the feedback you are hearing, are there any concerns with the rollout that we should be aware of at this particular point, or two things seem to be

going smoothly? an issue with the fact that nondepository institutions -- i agree with my colleagues that we want to remedy that situation. mr. holdsclaw: from my membership, we are not hearing anything negative in regards to the rapid response. obviously a couple weeks ago the ecip program, when i would check in with folks who were able to garner that money, i would hear things like transformational, game changer, especially from a lot of minority deposit institutions i reached out to. i had a conversation with the ceo of the second oldest bank in the country in a drum, north carolina, and he said it was unbelievable what it would allow him to do. sen. van hollen: i think this is something that we are all proud of the funds made available on the forward to working with you. my final question relates to,

mr. altman, relates to providing opportunities for more cdfi's to participate as lenders under the sba programs. this was an issue that really came to a head during the pandemic and the ppp programs. we saw that cdfi's are very important conduits for those funds. we don't have enough cdfi's who are certified with sba programs. what do you think we can and should do in that regard? mr. altman: two things. more cdfi's are to have access to a license that we have. they only have access to these 7a licenses. it does allow us to be a national -- the sba has been offering a pilot program that allows cdfi's to make sba-

guaranteed loans. that should be made permanent, and i believe there has been legislation to make it permanent. it is a vital tool, and cdfi's referring to that pilot program are able to access ppp program very effectively. and the rule of technology in supporting the lending that cdfi 's do. in the sba loan origination, is a complicated process. there is a platform that cdfi's are using to originate there sba loans, but it is a very, very useful and forward-looking platform. it's important for cdfi's to be able to access technology

platforms, as banking is doing right now. that should be part of the sba discussion as well. sen. van hollen: thank you. thank you, madam chairman. sen. smith: thank you, senator van hollen. senator warner, welcome to the subcommittee. great to have you, given your interest and commitment to supporting cdfi's. sen. warner: thank you, chair smith. i appreciate i am very proud of the fact that so many and this community work so hard to get that $12 billion.

the grants went out the first round. the second round came out later. we were way oversubscribed on that item. it showed the capacity of this group. we need work as well. i am going to hit two or three points pretty quickly. i am really interested in this whole idea of taking cfi portfolios and securing them. i think that is the next big step we need to move to.

i had conversations with the fed. what else should we be able to -- what tools -- do you need additional tools from congress? how can we do this? >> thank you for that question. we actually did pioneer this as a tool early on. we have securitized through 21 different issues. mostly small businesses and nonprofit loans but close to $100 million in affordable housing loans.

the larger ones we did -- this was all done without any particular government support. especially maintaining compliance with tax laws and so forth. after the crash, the market for securities just collapsed. we had to move in a different direction. this is usually done through special-purpose vehicles. we require the pet -- we require the special-purpose vehicles to come back. that made it virtually impossible to it -- to continue to secure this without having a much larger balance sheet. we moved to other tools because the balance sheet was supported from an accounting perspective. that was one of the issues that

was needed to be examined. the second issue is securitization works the best when they are standardized. they do their own thing. we don't need to create standardized products. security is still a challenge. we could use the ppd product as a prime example. it became very liquid. this could be put into facilities that are unlike this. >> we would like to keep working with you on this because we had conversations with the fed on

this and with private capital. that is what i want to move our last question two. how do we leverage private capital? i want to hear this from the balance of the panel. there is a lot of talk from private capital about wanting to get in. i think this could help us on securitization. i also want to make sure that some of these are most in need and could not meet all of the requirements. is the also away where some of this private capital could help smaller and other entities?

>> thank you. i think that in the wake of everything we had last year, i think you saw this influx of private corporations, together and making deposits into ndi's. i think i would say one way to increase it is to look at these emerging cfi's again to try to get some of those ndi's to be able to foster those relationships. we have this time where some people were not able to capitalize off of it.

there are first responders from a financial standpoint. >> i am not a subcommittee member. i don't want to overdo. one of the things i would have hoped the subcommittee looked at as well, as long as leading the efforts on cra reform, outlook to get a record on how we could use cra reform. >> thank you so much. i think those are great issues to follow-up on. we look forward to continuing to work with you on this. i believe unless i am mistaken, i believe everybody who is interested --

let me turn it to senator rounds. >> it is a good subcommittee hearing. this has been a good informational meeting. it has been a very beneficial meeting. i think you madam chair. >> thank you very much. i do have just a couple of follow-ups i would like to ask the panel before we close. then to get to those quickly. the first is this. a lot of state legislatures including my state legislature developed some economic relief packages for small businesses.

these step up in helping these funds. now i have heard that some of these cfi's in minnesota are facing challenges getting certification because those emergency loans were outside of the narrow definition of their target market. let me just ask -- they funded the department of treasury. this divided some target market -- target market exemptions. i just want to turn tea about this mr. altman. >> it is a challenge. we are -- we are a national organization.

you would literally have to show that low income people were benefiting by using these proxies. there is another one called investment areas and that is geography established by this fund based on certain characteristics. investment areas tend to be limited and are held accountable by advisory committees. for an organization that is national, it is impossible to have 50 advisory committees to be able to investigate nationally. there are other target markets

that are target markets for cfi's. accountability is very important. that needs to be streamlined. finally, this issue you are raising of cfi's being asked to take up the frontline effort. i think after the pandemic, they need to provide some relief to those who might be living for issue related purposes but not necessarily in time -- inside their target markets. >> i am wondering if you heard about this as well. >> i have heard about it.

you're having more stakes now. one of the things that we talked about that the coalition is doing is trying to get everybody on the same page. there are some complications as it relates to the target market. >> look forward to working with you and everyone on that. this is something we should be able to find a solution to. the last question i want to highlight before i close is that several of you and your testimony mentioned the role that cdf i's can't have in his pending childcare business. this is such an important issue when we are seeing workforce

shortages and deep challenges in the childcare sector. this seems to be really important opportunity. is there anything more you would like to say to highlight the importance of the role they can play in addressing the childcare shortages? >> you got me in my sweet spot. having the opportunity. i think the childcare piece is probably one of the most or least known about. you have organizations in maine that have a 40 year track record of working with childcare facilities from a finance standpoint but there is also a develop an service point as well.

they are providing those developments services which is more or less for those trying to open health care and education. i think they played a great role but it is probably one you need to do a better job of highlighting. i would like to send over any information in regards to some of the problems we had from a childcare and senator standpoint. >> thank you so much. i know this is an issue you are deeply committed to and passionate about. would you like to say anything more about this? >> i think that they are a hard bottle to fund in the traditional way.

if you can create unique financial partners, that can match the daycare model. it is funded federally. as far as what they can do, if we can get access to more flux will capital to offer lower interest rates for these types of models, that would really help. as developers in our community, we can look at building the buildings and helping with the operations cost to offset the cost to make it more affordable to our community. thank you for this opportunity. >> you are exactly right. this is upgrading and improving facilities that we need to support more as making the business models for childcare function for parents and providers where we have situations where providers are making not even up to support

their families at the same time parents are placed out of childcare because it is so expensive. there are many opportunities here. i want to thank all of our panelists for a terrific discussion about the opportunities we have to support, community development. thank you so much for the opportunity. we have heard a lot today about areas of bipartisan opportunity to come together. also, so we can find a bipartisan agreement. also, providing increased funding. i look forward to continuing our work together on this. i want to thank everybody. they could to our witnesses for being here today.

and for senators that wish to submit questions for the record, those questions are due one week from today. that will be wednesday, january 12. for our witnesses, you will have 45 days to respond to any questions for the record. thank you again. with that, our hearing is adjourned. >> one year ago, testers broke through police security and occupied the u.s. capital. we look back on that day, live on c-span, beginning at 7 p.m. eastern on washington journal, taking your phone call's, facebook, and tweets. and then joe biden and kamala harris deliver remarks from the capital. and then at 2:30 p.m. eastern, lawmakers take part in a form sharing their thoughts and

professions on that day. members of the house and senate gather on the center steps for a prayer vigil and following the vigil, we will repair -- repair events from the day and take your phone calls. this is live, thursday on c-span or watch on the go with our new c-span now mobile app. you can also go to c-span org to watch or coverage or search our library where you will find all of c-span's coverage and the government's response. >> the supreme court is considering challenges to the administration possible axing mandate for health care workers and companies or private businesses that employ or than 100 workers. we will have live coverage of the oral argument friday starting at 10:00 a.m. eastern on c-span. you can also go to c-span.org or use our free video app c-span now.

? of conversations while in office. here many of those conversations on c-span's new podcast. question season one focuses on the residency of the johnson. he will hear about the 1964 civil rights act. the march on selma and the war in vietnam. everyone knew they were being recorded. >> johnson's secretaries knew because they were tasked with transcribing many of those conversations. in fact, they were the ones who made sure the conversations work taped as johnson would signal to them through an open door in his office and theirs. >> >> presidential recordings on

c-span now, the mobile app or wherever you get your podcast. the chair of the senate rules committee, amy klobuchar, willie blunt