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I 1997 Changes in Economic Development Pro r�d funJing ,by Cameron Whitman to the new requirements thrifts and BIF-insured banks program,which$100 million growth in the CDF[ prog The Community Reinvest- imposed on the Bank Insurance will begin to share in FICO more than 1996.The agreement should be promoted prior to ment Act(CRA,and Bank Regu- Fund 111171 - insured banks. interest payments on a pro-rata also provides an advance appro- implementation of an effective • latory Reform These banks will have to pay a basis. (This means that banks priation for 1998 of 31 billion. management structure. Con. in the[tame of bank regulato- share of the annual interest pay- will pay about 75 percent of the Economic Development gress has not received a CDFI ry relief, persistent efforts to ments on FICO bonds dealing annual payment.) This final Administration(EDA) staffing plan to explain how the weaken the Community Rein- with the Savings and Loan legislation requires the FDIC to Despite repeated attempts office will be organized and what vestment Act, essential for bailout. Currently,the Savings merge the BIF and SAIF on Jan- during the 104th Congress to personnel resources will be increasing lending and invest- Association Insurance Fund uary 1,1999. eliminate the Economic Devel- required to carry out its various ment in underserved communi- (SAIF,is paying of;alone,$790 The final Appropriations opment Administration, the functions. ties, were initiated during the million a year in interest on the Agreement contained two minor agency survived in tact. After 104th Congress. $8 billion in Financing Corpora- legislative changes affecting the having its 1996 funding level Neighborhood Relmeshnent NLC joined with a large coali- tion (FICO) bonds issued in CIA. The first will permit an slashed from $450 million to tion of national and community 1989. annual inflation adjustment to $348.5 million, this year the Corporation(NRC) organizations to fight to pre- The Bank Insurance Fund the threshold ($10 million) for EDA did not experience further serve the CRA which,since its (BIF)insures bank deposits and depository institutions currently cuts in funding. Appropriators agreed to passage in 1977s,has produced is Fully capitalized so banks pay required to report under the On a positive note,Congress, increase funding fur NRC to more than$130 billion in lend- a fat annual fee of only$2,000 Home Mortgage Disclosure Act recognizing the assistance the $49,900,000 in 1997, from the ing to underserved,low-income for insurance on their deposits i HNIDA). The threshold will be EDA has provided local 1996 level of$38.667.000. This communities and borrowers. while thrifts must pay the raised immediately to approxi• economies devastated by natural is an increase of$11.23:3 million The immediate fate of the CRA undercapitalized Saving Associ- mately$28 million in deposits disasters and economic disloca- above the 1996 level and$5 mil- was determined during the ation Insurance Fund about$.23 before a bank would be required [ions,provided the agency with lion less than requested by the recent late-night negotiations of per $100 of deposits (about to report. Future adjustments an additional $25 million for Administration. r the Congressional appropria- $800•000 per year). to the threshold will be made 1997 to help with areas devas- The corporation helps local tors, and was included in the This disparity in insurance based on inflation. This will [aced by hurricanes Fran and communities establish working final Omnibus Appropriations fund payments has put thrifts at exempt an additional 1500 Hortence. Funding for the partnerships between residents Agreement(H.R.3610). a competitive disadvantage with banks from the requirement to Department of Commerce, and representatives of the public During the 104th Congress, banks. Thrifts cannot reduce report under IVvIDA. This isn't including EDA,was included the and private sectors. The part. numerous proposals were their premium rates until the a positive change as far as CRA Omnibus Appropriations Agree- nership-based organizations are defeated which would have trip- SAIF is fully capitalized. Under advocates are concerned but it is ment(H.R.3610). independent, tax-exempt non- - pled the CRA. Without serious this agreement,assessments on far less damaging than the pro- profit entities: Neighborhood harm to the CRA, the final BIF-insured banks will be one- posal in 5.650(the Senate regu- Community Development FinanCicl Housing Services INHSI.mutual Omnibus Appropriations Agree- fifth the assessment on the thrift latory reform bill) to raise the Institutions ICDFq housing associations,and apart- ment included several bank reg- deposits and these assessments threshold to$50 million which ment improvement programs. ulatory relief provisions which are to be paid through 1999.The would have exempted around Congress agreed to fund Collectively,these organizations affected the CRA only slightly thrifts must also pay a one-time 3,000 banks. CDF[,a pet program of Presi• are known as the Neighborhood- These CRA changes and other payment of$4.6 billion to capi- The second change to the dent Clinton; administered by Works network. provisions are seen as a balance talize the SAIF CRA will allow banks to estab- the Department of the Treasury; On January 1, 1999, the lish ATV[ locations without at $45 million during 1997. Nationally, there are 177 going through the regulatory Total funding for FY'95 and'96 Neighborhood Works organiza-n approval process required under was$50 million.This is$80 mii- tions which form a network in the CR-t.The original version of lion less than requested by the approximately 150 cities. They this legislation would have Administration. The 1997 fund- have effectively revitalized over exempted mergers and acquisi• ing level recommendation 348 neighborhoods.Seventyrone tions from the regulatory includes $3.6 million for Man- percent of the people served are approval process. This would agement and Administration, in ver:-Inw and low-income have eliminated the CRAB criti- $14 million for Incentives for bracket''- cal community monitoring and Depository Institutions,$8 mil- The eighborhoodWOrks net- comment process currently in lion for Direct Loan Subsidies, work improves the quality of life effect for banks when they apply and$19.4 million for assistance in distressed neighborhoods, to regulators for permission to to community development increases homeownership merge.acquire new banks.and financial institut ions. through targeted lending efforts, other tinges in the services Appropriators did not believe exerts a long-term. stabilizing they offer it was prudent to provide the influence on the neighborhood additional$80 million requested business environment, and Low-income Home Energy Assistance by the Administration for this reverses decline. These organ- Program(IIHEAP) new program which is in the ini- zations have been positively tial stages of beginning opera- affecting urban communities for tions and only now is issuing its over two decades.Recent experi- In the Omnibus Appropria- first round of awards from fund- ence has demonstrated the suc- tions Agreement iH.R.36LOi ing provided in fiscal year 1995. cess of this approach in rural Congress agreed to provide $1 In addition.House appropri- communities when adequate w - billion in 1997 for the LIHEAP ators did not feel that rapid resources are available. ,^ I •