The NCIF Network

CDFI Bond Guarantee Program Working Group Charter

The CDFI Bond Guarantee Program was legislated by the Congress to guarantee bonds backed by assets originated by Community Development Financial Institutions (CDFI) to provide greater liquidity and capitalization to high impact CDFIs. Regulations are likely to be announced in late 2011 with the first set of guarantees likely to become available in 1Q2012. Guarantees will be issued in the amount of $1 billion per year in minimum issuance amounts of $100 million by a CDFI. This is an annual commitment of $1 billion for four years but with the caveat that the proceeds need to be deployed by the end of each fiscal year, else the government support is lost – hence time is of essence. The program has been likened by some to the Historically Black Colleges and Universities (HBCU) Capital Financing Program.

As part of NCIF's advocacy work on behalf of CDFI Banks, we have made comments on the upcoming CDFI Bond Guarantee Program. Our comments focused on the needs of the CDFI Banks in the NCIF Network, and hope that these suggestions will help the CDFI Bond Guarantee Program generate maximum impact for CDFI Banks and more importantly, the communities they serve. Please review the letter that NCIF submitted, NCIF Comments on CDFI Bond Guarantee Program. (PDF Download)

We expect that the Bond Guarantees can be used to guarantee a set of “eligible securities” whereby CDFI Banks borrow directly from the pool - this will be akin to Trust Preferred Securities (TPS) or Subordinated Debt at the Holding Company that can be down-streamed as common equity. Please a sample diagram CDFI Bond Diagram. (PDF Download)

We believe that this structure can help revitalize the TPS market and hence can be a source of capital for the healthier CDFI banks.

Working Group and its Objectives

NCIF is convening a Bond Guarantee Program Working Group composed of CEOs and other senior staff from CDBIs that are interested in obtaining capital/funding. Specifically, the Group will be tasked with;

1. Bring in CDFI Bank industry specific knowledge to guide the development of the program;
2. Create a structure that works for CDFI Banks;
3. Execute a letter of intent and issue the first set of securities consistent with the program;
4. Facilitate the further development of the Charter of this group including seeking financial support from participants.

NCIF will continue to be in discussions with the Regulators, CDFI Fund and the Department of Treasury and will bring in market resources as needed.

Working Group Member Commitment

The initial time commitment is minimal but over time eligible CDFI Banks will get more actively involved to do the first issue. Please take advantage of this resource by becoming a part of the CDFI Bond Working Group.

Please sign up today using the form to the right!