 Good afternoon, everybody. I'm Michael Barr. I'm the Dean of the Gerald R. Ford School of Public Policy. I'm thrilled to be here today for today's policy talk, which is co-sponsored with our Center for Finance Law and Policy. Today's event is part of the Ford School's Towsley Foundation Policymaker and Residence Program. Established in 2003, the Towsley Program has enabled us to bring nearly two dozen diverse and high-profile policy professionals here to Michigan to join our faculty for a brief period of time. Our Towsley policymakers and residents teach, they mentor, they collaborate with other faculty, they become part of the life of the school, bringing the real world in all its complexity and its potential right here to the Ford School and the University of Michigan. The Ford School is honored to have our alum, Dudley Benoit, with here with us this semester as a 2017 Towsley Foundation Policymaker and Residence. Dudley graduated in 1995 from the School of Public Policy. He later earned an MBA from Columbia and went on to forge an incredibly successful and high-impact career in finance and in community development. Dudley currently serves as the Director of Community Development Finance at Santander Bank. He is also the Board Chair and on the Credit Committee chair of the New Jersey Community Capital, a CDFI that provides financing and technical assistance to build homes and schools in low-income communities. For the past few weeks, Dudley has been teaching a course centered around lessons from the community development finance field, introducing policy students to finance real estate development, affordable housing and related policy issues. Along with his teaching, Dudley organized today's panel of community development experts from across the country to discuss the growing field and what the future holds. I'm going to let Dudley introduce the panel and all the panelists in just a moment. The topic of today's discussion is near and dear to my heart. I've spent most of my time in government and in my research career focused on issues in community development finance, starting back in the Clinton administration in the mid-1990s, working on what became the Community Development Financial Institutions Fund and the New Markets Tax Credit Program, which unfortunately are today somewhat under attack in the policy space. Let me just say, if you have a question for Dudley or for the panelists, we're going to follow our usual procedure here. Please write it on one of the cards passed out at the entrance. Our Ford School team will begin collecting the cards at around 4.40 p.m. Two of Dudley's students, Allison Zimmerman and Gabriel Horton, will sort through the question cards with Tobin College Professor Mark Norman and read your questions. If you're watching online, please send your questions via Twitter using a hashtag policy talks. I've never tried that, but I'm told it's fun. And with that, Dudley, let me turn things over to you. Dean Barr, thank you so much. Thank you everyone for coming out. I appreciate it. I've been looking forward to this discussion for a while. I think everyone's bio is in the program, so I'm not going to, I will introduce everyone, but I won't go through the lengthy detail because each of these panelists are pretty accomplished people in their own right. I do want to point that Laurie Chapman from Enterprise Community Loan Fund was supposed to join us, had a family emergency in the middle of the night and sends her regards, but could not make it. We miss her, but we will soldier on. So to my, the one thing about this panel and the field that I love is we've all in this collectively been in the field for a while. And this field is one where people may switch seats, but once they get into it, they typically don't leave. So it allows you to make life lasting friendships and partnerships. So I probably imposed a little bit on friends to come out here and help me out with this panel. And it's I'm glad they all accepted. So to my immediate left is Wayne Meyer, who is the president and CEO of New Jersey Community Capital, a statewide CFI, but more than statewide. And will those of you in my class tomorrow, he'll come in and talk about the work they're doing across the country and foreclosure prevention, but really a trailblazing institution. And Wayne is a phenomenal leader and inspirer of minds to think about our communities and what needs to be done there. I've had the pleasure of serving on the board of New Jersey Community Capital, probably going back to 2003. And I just recently, so I should have updated the vibe, just recently had to mandatory rotate off of Wayne's board about his board chair for Wayne for the last five years and watched him do amazing things at his organization. To Wayne's left is Lila Wingard, someone who I worked with probably about the better part of 15 or 16 years of JP Morgan. She just recently retired about a month ago, but she has been in the community development and CRA space, although she doesn't look it for approximately 30 plus years and has a wealth of knowledge and experience. And she's been a great partner and friend to me as I grew up in the business and as we grew our business and grew how we approach the industry in the field. And she's, as the her bio states, has this been key in developing the field policies really just has been enormous help to all of us, not just at our bank, but across the industry and the work that we do. And then lastly, what's far left is Roberto Barragan, who I've known the least amount of time, but who I've spent an enormous amount of time with during that time. I think we first met five. 2010. 2010, so 70, wow. 2010, when JP Morgan was working with a lot of CFIs and looking to put equity, grant equity into emerging CDFIs, they're really the way we use on the cups, really blowing up and doing more things. And Roberto's group was doing trailblazing things in the small business space, and we really wanted to support him and from there, a blooming friendship in a great partnership brew. So those are the panelists. So thank you for joining us. And in interest of time, we're going to jump right in. So first question I have is for you, Roberto, you've worked at a CDFI that expanded nationally to bring small business lending, which is probably one of the hardest things to do in the clean development space on balance sheet, non-government subsidized small business lending across the country. How do you, how were you able to actually make sure you're having the community impact all the way on the ground, on the ground versus, you know, there's so many layers to what we do. As an add-on, I've been in running non-profit organizations, some CDFIs for the past 30 years. And the days where you can have a plan, a program, a structure developed and then go in the community and try to deploy, try to implement our days past, unless you understand clearly what the needs are of the community, what you want to do will not match. And there's, you know, projects and programs and funds all across the country that have been a great example of that failure. The fact is, is that in, you know, to the extent that you want to get something done, talking to, you know, to the community becomes number one. And with small business, I think it's a little more complicated, but for small business, it becomes the local chambers of commerce and the local merchant associations first. And I've implemented programs in Los Angeles, Chicago, Las Vegas, New York, Miami, and San Francisco over the past 30 years. And in almost every case, my experience has been figure out first what, how they articulate the needs. And again, chambers and merchant associations are a good place to start with and do the small business and understand what their members are talking about. But because most of what I've done, have done is in lending, the next week becomes, of course, lenders, banks, credit unions, organizations that are already there trying to lend or trying to deploy capital. And ask them the very simple issue, you know, why do you say no? And in the case, unfortunately, of banks and credit unions, there's more nos than there are yeses to small businesses in particular, entrepreneurs, individuals trying to start up a business, everything from a, you know, a small convenience store to a bigger manufacturer. You know, what do your denials look like? Why, you know, why are you saying no to them? Even those who are completing complete applications and bringing in business plans and potentially have collateral and maybe okay credit. Why are you saying no? What are the issues and challenges in getting capital into this community? And government, you know, yes, you know, a government is part of the equation, but, you know, frequently I would, you know, seek input, but not direction, you know, from government. I want to hear from elected official. I want to hear from their staff. I want to, you know, talk to the economic development managers in those communities to understand what was getting done and what wasn't getting done, what needs are being met, what needs weren't being met, what kind of capital was available, government dollars, private dollars, foundation dollars, and frankly understand from them as well as all the parties is to understand, you know, what they saw as, you know, not, you know, laterally and not definitively, but what they saw, what was their viewpoint and was their opinion in terms of needs being met and not being met. And finally, the, the, and finally after all of that, it's been, you know, my experience that if you design a program based on the needs, based on the challenges, you know, that respond to lower credit scores, that respond to lack of equity available, that respond to no collateral. If you program, if you do a program that's designed to that reality, the potential success of the program is that much higher because you're, you're not imposing your will, you're not imposing your funder's will on a community, you know, you're saying, you're, you're saying, look at, you know, we're going to, we have this amount of money to, to, to, to deploy, you know, from our experience and when we're hearing, we're going to lose 10% of it. I, you know, I developed a program with Chase that was, we had 20% loss potential and it was designed that way. It had low loss reserves, you know, to, to, to meet that it had, it had a criteria designed for it and we implemented and were successful in that deployment because it was designed to meet, you know, both, you know, income wise, credit wise, you know, ethnically, demographically to meet that, you know, that certain reality. So that's a quick follow-up. Are most programs being, you know, just be perfectly frank. Are most programs being developed that way? No, no, you know, no, and, you know, usually what happens is that there is some initiative, you know, put together, you know, by, you know, the SBA, local government, you know, local government, some big city, you know, we're not getting enough capital in there. How do we do it? Most recently, SBA launched, you know, in the prior administration, late in the prior administration, a program to serve basically African American populations in Baltimore and, and, you know, African American populations in, in Los Angeles, and they talked about, you know, how do we increase procurement, and how do we, how do we mark our program better, and how do we find capital? You know, it was kind of involved in their own conversation and own kind of just, you know, intellectual conversation about what the problems were. And they had no money. They had no money. I mean, it was a conversation, a lot of conversation, but no money. I mean, at the end of the day, you get capital, it gets capital. If you're going to have a conversation about a small business loan program, at least, you know, start with the fact that, you know, you know, there's some money available. Because if you don't start with that, that, that kind of, you know, at the beginning, the rest is just conversation. Thank you. So Wayne, I'll turn it over to you. New Jersey Community Capital is, as we mentioned, a statewide organization. But your foreclosure prevention work has taken you to several other states, Florida, North Carolina, I think you're moving into Ohio. So talk about that work, but specifically, how do you fit that into the organization's mission? Because that's really wasn't initially the organization's mission. You really, they had to work in the communities in New Jersey. And then how did you get your board comfortable with moving outside of your, your, your, your natural strategic catchment area? Sure. Thanks, Dudley. First, let me say it's really a privilege to be here today. And part of what I hope is that we can interest and attract more young talent into the field of community development. And that's certainly a goal at New Jersey Community Capital. And glad to talk to anybody who wants to do after this. So, secondly, I need to thank Dudley because he's been our mentor and an amazing leader in New Jersey Community Capital. He's one of those rare guys that if you mentioned his name around the country, Dudley, you don't even have to say his last name. It's kind of, it's kind of like LeBron. I was going to say Madonna, but, you know, I was going to say LeBron, but, you know, first of all, let me just start by saying that the importance of community development organizations, financial institutions, development corporations to be able to partner and to be able to collaborate on a meaningful basis. And it's something we have not done well in the sandbox together over these years. And, but I see more and more of that type of collaboration going on. I think it's vitally important because in an age where we're working on more complex transactions among different asset classes, you know, education, economic development, housing and the like, that we really need all of the best type of talent to figure out how to, how to do that. It's also important if you think about how to allocate capital and how do you absorb capital effectively in some of this work to be able to do that in partnership, I think is, is really, really meaningful. And finally, it's around risk, right? As Roberto said, how do you manage risk? So to the extent, let me just start by saying it's really important that we think more and more about how we partner. So New Jersey Community Capital, you know, we do, we're a statewide CDFI, you know, we provide financing investments to rebuild low moderate income communities around housing, around educational facilities, charters and early childcare facilities, around community facilities, around economic development type projects, and really how do we build safe and vibrant neighborhoods in the communities that we work in? But New Jersey is probably, many of you know, has had some real housing issues over these last, since the foreclosure crisis, right? I think we've been number one, you know, we don't like to really weed in this type of stuff, but one or two in foreclosures. Number one or two in the amount of seriously delinquent mortgages. We have a high negative equity in our loans that we've done. And then, and then we have these other indicators, right, that we're at a fourth highest cost burden state in the country. So it drives us crazy when you think that you have all these houses that are frozen in foreclosure and you have people who have dire need of quality affordable housing. So in New Jersey County capital, what we tried to do is, okay, well, how can we respond to this effectively, right? So we developed a number of programs. We're a lender, right? That's what we do. So we lend to a hundred non-profits in the state of New Jersey to acquire and redevelop housing, to repurpose it, vacant housing, foreclosed housing, as affordable housing opportunities. We started a non-profit real estate development subsidiary because unfortunately, a lot of community development groups in New Jersey struggled, right? And we've seen that a lot of them have imploded and that's really an issue for another day, but we got to figure out a way to rebuild the delivery system around community development in this country. So we developed this really high performing real estate development company, right, that really developed in lots and lots of housing in the state of New Jersey. But then if you think about that, right, we're always lending the groups that are dealing with vacant housing. Our non-profit real estate subsidiaries is developing vacant housing. So we wanted to figure out how do we get ahead of the problem, front of the problem. So we created a program which we call the Restart Mortgage Role and Purchase Program. And the idea was simple, you know, mortgages in this country trade every week, right, all the private institutions, equity funds, hedge funds. We wanted to be able to buy mortgages with the goal of trying to reset them, to keep families in their home through mortgage modifications. And to be able to then, you know, settle the blocks in the neighborhoods that they're on. And by the way, when a house is vacant, it was an opportunity for us to redevelop it as affordable housing. So we became one of the first non-profits to buy mortgages from the Federal Housing Administration in bulk under what they call the Distressed Asset Stabilization Program. And as we were doing that, the state of Florida came to us. They said to us, you know, would you guys think about bringing your program to Florida? And, you know, it's a nice turned winner, right? So we thought, sure, you know, but we had a it was a really difficult decision for our board, right, because we're a New Jersey based organization. That's what that's what we do. But we thought about it differently in a sense that, A, as I went to back before, how do you share best practices, right? How do you collaborate? So and how does it fit into your mission? So from our vantage point, it was a public policy imperative because there was a lot of talk around housing advocates around the country saying, you know, your FHA, Fannie Mae, Freddie, you're selling our neighborhoods after the hedge funds, the private equity funds. So, you know, how can you get more of the non-profits and units and government involved in this? So we ended up partnering with the state of Florida in doing that. But we divided what we call our North Star guiding principles, right? First was that it was mission and that we were advancing what we thought was a housing policy. Number two, we wanted to make sure that we retained a certain degree of operational influence, right? We didn't because it was reputational risk. We wanted to make sure that we were involved in doing that. Number three, what Dudley told me all the time, protect the balance sheet, protect the mother ship's balance sheet, right? So don't expose the core operations of our business in doing that there. And last, but it has to be financially sustainable, right? And that's a really important part of the work that we do to around about financially sustainable. So the outcome was, I think, was successful. And since then, FHA has made modifications to their Distress Asset Stabilization Program, where they now do direct sales to non-profits and units of government. I like to think it was part of what the work that we did, Fannie Mae has what they call Community Impact Pools. We bought 10 of them and we recently partnered with the state in New York and their homes and community renewal, their HFA, to partner on buying another 400 mortgages and where they invested money in the fund to do that. And just this last week, you know, Fannie Mae had the first ever Community Impact Pool where it wasn't just targeted to a geography. It was around multiple geographies. And the idea was to be able to bring in non-profits around the country to help to do that. They were hoping that we would be the lead counterparty on this transaction, which we were, and we ended up winning a bid, which we're really happy about. Now, here's where the housing policy comes in, because we advocated housing groups around the country advocated that we should be able to get a second look. If we didn't win this bid because we're going up against equity funds, hedge funds, that if we don't win a bid, we put in a credible bid, we should have the opportunity to match. And we lost by 1%, right? But Fannie Mae had to come back to us and said, if you guys are willing to match this bid, you get it. And we did. So, you know, I think about that, you know, so again, it goes back to its affecting housing policy. It's bringing and strengthening collaborations more importantly for us in New Jersey or keeping families in our homes that were developing affordable housing. So I do want to take a moderator's imperative here to Toot Wayne's horn. What was done with this organization was trailblazing and so far is the only option you had in the past, if you were a owner struggling in your mortgage, was to basically try to go back and forth with the bank and do a short sale or stop paying and hope they come to you and negotiate and hope to God that something goes your way. So that's not exactly the most efficient way of going about that. But for most people, that was really their only hope. And in New Jersey, where I'm from as well, unfortunately, we are a judicial state. So we probably have, we probably lead the country in length of time to get through the actual foreclosure process as well to get you to share of sales. In New Jersey, Wayne, the average delinquency was what people were delinquent like 48. Yeah, about 47 months. So people were delinquent four years on a lot of these mortgages before he can get through the whole process. So that's a long time. And then you end up creating zombie communities. So what they were able to do is basically an ethyma. And part of what Wayne isn't going to talk about is a lot of his nonprofit partners or colleagues were really reluctant to partner with hedge funds because what Wayne didn't mention on these early funds and to this date, the equity investors oftentimes are hedge funds, really the big hedge funds that you hear about all the time. And they were an ethyma to partner with them because it was against their mission theoretically, which I thought helping the communities with a mission, but that's a whole another conversation and was able to see and make the board and come to me and have the board see the bigger pictures like we have an opportunity to buy 500 loans at a time here, 300 loans at a time here, own them ourselves, have full control about how they get reset. When they get sold, that's going to be way more effective to change the communities versus trying to work with and not saying the people that do housing counseling are not doing good work. They are doing God's work, but your ability to affect those communities is a lot better if you own the actual assets and you get this set, you know, set the strategy versus trying to go back and forth with Chaser Bank of America or the like. So I just want to make sure that that's not lost. Those of you in my class tomorrow will hear more detail about the work that Wayne and NJCC have done. But I think that's the potential on we think about policy and impact and impact in communities that these organizations have. So thank you, Wayne. Leela, I want to turn to you and again, looking at impact but from the bank side and thinking about the way banks' responses have changed over time. If those of you may not be familiar with the community development field, but it really started with the Community Reinvestment Act and I believe sometime in the early 80s, a bank was denied the ability to merge or open a branch or I can't remember the exact details because they hadn't followed the Regulations of Community Reinvestment Act and that kind of sent all the banks scurrying to kind of set up these entities. But it wasn't necessarily a thoughtful or strategic response. It was a defensive response. So Leela, if you could talk a little bit about that history. Thank you and it's a real pleasure being here, being on the campus and being in this forum to talk about policy issues that affect lower income communities across the country and to be on a panel with folks that I've known for a long time who've had a huge impact. And I think, Dudley, you're absolutely right that the CRA was passed in 77. The HMDA data first became public a few years afterwards and community development was really at that point reactionary. We were responding to what was expected of banks by the regulatory agencies, responding to the most vocal advocates amongst us who would engage in protests that range from asking the agencies to deny applications for things that the banks wanted to do to stimulate their own institutional growth or that range from being on the sidewalk outside your building and disrupting your daily business operations. And at that time, in addition to being reactionary, a lot of us in the industry thought of community development more as charity than we did as business. So we were responding to the organizations who said we need money, we need funding, we need grants to do X. And we were being reactionary. Fast forward to today, we are much more collaborative, we're much more strategic, and much more focused on a double bottom line, if you will. How do we have invest in things that deliver against the community development mission to strengthen communities? But there are also safe, sound, deliver a return for our institutions and have a strong impact in communities. Housing has long been the focus of the CRA, but over time, it evolved to incorporate small business and economic development and community services. And what we've learned by focusing on the impact of our investments is that if we invest in housing alone, you put people in houses, but you still have to be faced with the possibility they can't afford to stay in those houses. Jobs are important. Job training is important. Small businesses and economic development is important. Education is important. Having basic services that make for a vibrant community, grocery stores, for example, there's lots of food deserts across this country because no one has invested in opening stores that sell fresh food or an assortment of food in those communities which result in health problems. So this whole circle of life that needs to be invested in and maintained over time to create a vibrant community. And so I think one of the big things is that over time, we've become much more strategic about where we invest, who else is investing in those communities? How can we collaborate not only with each other, but with the community organizations? And as Roberto was saying, we can't, as an institution or as an industry, come up with solutions on our own. We have to talk not only to the community organizations, local government, but we have to talk to each other. This is a competitive business for the financial institutions, but it's also a collaborative business. And where some of the deals are so sizable that we have to work not only with nonprofit partners but with other industry partners to make the deals a reality and to have the impact that will be sustainable within the community. And so I think we've hired more talented personnel. We have hired personnel who are devoted to this field, who don't want to do anything else, who want a job and a career where they can not only do good but do well. And so we're investing in that as a discipline. We're investing in measuring the outcomes and not just a numbers game but the real impact on how it's changing the trajectory of life for the children growing up in the communities, for the families that reside there and their mobility. And it's very analytic to do that and it takes a period of time. Your investments have to be in some cases for decades as you start to see the change. The other thing I will say as a final remark is that again we can't do it alone and nonprofits are often trying to accomplish major things without having a real investment in themselves. And so one of the things that's a really important element of community development I think that we've learned over time that industry has evolved to in conjunction with the nonprofit community is building the capacity of those organizations that may be doing work that for some reason or another banks can't do or won't do. And so how do we build the capacity of those organizations so that they can excel at that work? Thank you, Leela. And that's the piggyback on that if those of you who are not familiar with how the industry started but the industry started almost as for lack of a better term than arranged marriage. You had banks that had to do this stuff for regulatory reasons and you largely on the other side of the table had community organizations that were not in finance by any stretch of imagination but they were in the business and passionate about improving their communities. And one of the few ways that they can get funding for that because there weren't a lot of people that were just gonna fund community organizing was through financing, low-income house and tax credit developments and financing affordable housing and those developer fees and income would then finance the other parts, the mission parts of those organizations. So you started out in a field where you really had bankers and community organizers working together and kind of winging it and trying to figure it out as they went along to where we sit today where there's a very sophisticated community development finance field. And like I joked in my class folks that it helps a lot of lawyers and accountants send their kids to Harvard and Yale and Michigan. That wasn't probably what folks thought was gonna happen when the field started but that's kind of what happens when you create a multi-billion dollar industry and that's what the community development finance field is today. And that's kind of why I wanted to have this panel really talk about how do you make sure that these needs are being met at the community level because the numbers can get dizzying if you're thinking about how much we do at banks. Where my bank recently made $11 billion commitment over five years. So how does that actually affect people on the ground? It takes a lot of work and effort and there's a lot of things that go into that. I wanna come back to you, Roberto. As you know, there's been a lot of talk about entrepreneurship, small business and you refer to that some as, but recently an increased emphasis about making sure that we're helping small businesses growing in bloom and in the low to moderate income areas that we all spend a lot of our time working in. There's obviously additional barriers and that's making it harder. But obviously you talked about getting in there and actually understanding needs but what are some of the other things that you've seen that have worked in these communities? Well, I think some of you may be familiar with the program from the Small Business Administration called Community Advantage. Community Advantage is an attempt post financial crisis to give community development financial institutions, which that's what my experience is, the ability to do an SBA guaranteed loan. And the magic there is that many banks use SBA as a product to provide additional collateral support to make a small business loan. And banks can do these loans up to $5 million. Number of years ago, the SBA gave CDFIs, the ability to do Community Advantage lending, which allows us a nonprofit organization to make a loan with a 75 to 85% guarantee from the SBA. The magic behind it is it allows us potentially to increase the size of our credit box to do a loan to a small business that has cash flow but very little collateral. And at the same time, because again, the magic of the full faith and credit of the United States government, you have to sell that guaranteed portion at potentially up to 10% premium and create another level of income or generate additional income for the nonprofit organization. It's a program that still is in its kind of infancy. They did $100 million last year that pales in comparison to bank lending in that product, but it's a step in the right direction. Micro lending, microfinance, an area you've probably been familiar with, is an area where there's been a lot of, lots of conversation about its international focus, Muhammad Yunus and Grameen Bank, and how micro lending has allowed very poor households and third world countries to increase income size. In the United States, it's been something that has had both tremendous success and some challenges. More recently, microfinance is seen as something that is no longer relevant, but in fact it is. It continues to be a major way for underserved populations, particularly African-American, Latino, small business or entrepreneurs, to get business started and to move them in the direction of real small business lending. Most recently, while I'm talking about CRA, HUMDA and the collection of HUMDA data allows us to know what a bank is doing in underserved communities, particularly in terms of demographics. We have not had that similar kind of tool within small business. There is no requirement for a bank to identify what level of number of application to taking from minority businesses or approving, and that has been prohibited by something called Reg B out of the Federal Reserve. Most recently, our Dodd-Frank, with the creation of the Consumer Federal Protection Bureau is a provision that's called 1071 that allows for the collection of that kind of demographic data for small businesses from banks. It's been, I personally have been involved in that for the past 20 years to get that information because as a small business lender, that would change the game. That will basically put banks and all finance institutions under some level of requirement to at least provide data and then be able to respond to the inadequacies in that data. As you've seen over the past, this past week, CFPB has been in the news quite a bit. There are supposed to be changes there, and I'm praying that doesn't necessarily affect 1071. Lastly, one of the things that financial institutions increasingly have begun to understand, and that has spoken to it very, very clearly, and in fact Chase is probably the leading financial institution behind it, is that strategic investments by financial institutions at dollar amounts that are significant can create wholesale change in organizations and in communities. The days where 1,000 here and 2,000 there and 5,000 there to a nonprofit organization doesn't move the needle, and hasn't moved the needle for the past 40 years of CRA. The fact is that that needle will be moved and has been moved in a number of situations, including my own with Dudley seven years ago, that allowed an organization that was $10 million in size in 2010 to go to $75 million over six years by putting equity and strategic investment into an organization and leverage it and grow it in a similar way as you do with a bank. Thank you, Dudley, could I just chime in here? Another thing that I would say characterizes and Roberto's comments made me think of this, characterizes the evolution of community development is when I think back over the years, a lot of programs and lending programs in particular were started in specialized units within financial institutions, community development groups, because mainstream businesses within the institution didn't think they were viable, we had no interest in them, they didn't meet the returns. And what we learned by offering these programs within a community development group and tweaking them was that we could do a sustainable business and then the program, the lending program, the product would be mainstream into our traditional business lines, where it could be deployed more broadly across geographies, have a much greater impact. So in a way, community development groups provided an opportunity to do some R and D in the community development field and find a way to deliver products and programs to underserved communities in a way that was palatable to the broader organization. I think we have a few minutes left, so I'm gonna ask one more question and any of you could jump in. As you guys know, many of the leaders in the industry that started, they were either founders or instrumental the growth of industry are tapping out, retiring, leaving for whatever reasons. And we have a great opportunity to refill those seats with the next cadre of leaders. How should the field be doing or focusing and working on increasing diversity in leadership, both at the organization level and the board of directors and the whole kind of the universe of the industry? That is an amazing question because it's probably the most critical question facing the community development field, least I know in New Jersey. It's ironic right after the 60s we had this whole group of people that created the community development movement, but I don't know, it seemed like there was a hiccup in generations or half generations where it didn't seem like many people were attracted to the field. But now we're seeing a turn in New Jersey Community Capital, one of the major goals we have is how do we attract and retain talent in the field? And I love when I come to my office and I see 10 bicycles, right? We got a lot of younger, but really amazingly talented people, amazingly talented, incredibly gifted people. So how do you do that? First of all, I think it's around the culture you create in your organization around that and embrace the great decision-making innovation comes with diversity. I think we have a great diverse board and I think it starts with that. And then I think one of the things that we have done, we've developed a fellowship program at New Jersey Community Capital where we used to have a housing scholar program in the state and it was done away with like over just last eight years with the past administration, but we picked it up and we continued to try to identify diverse talent into our organization. So that's one way. And then it's identifying those emerging leaders and putting them on a career path that really maximizes their potential through training programs, management programs, professional development programs. I'm not kidding, when I deeply believe it's probably the most critical question facing in the development fields, how do you show people that they could make a good living and it's up to us and coming upon us to do that, right? To be able to demonstrate that but also have a career path that's meaningful. So I think it's a great question. I mean, I'm an example of someone who's never worked for a bank. I basically started after business school at Berkeley. I basically went right into a executive director of a very small adult education, vocational education nonprofit organization. I got the job because I'd actually been invited to be on the board of directors while I was still in school. I got on the board of directors and first of all, I would encourage you day one. There's no reason to wait to be on a board. There's many nonprofit organizations there that cover the entirety of human experience and needs. If you have an opportunity or seek an opportunity, get on the board of directors. It adds to the resume. And the fact is, is that experience on a board? Okay, and these organizations are always looking for young, smart people to be on the board. They're looking for them, they want them. You know, because they need them in order to grow their organization. They need to bring power and I'd encourage you to do that. And I ended up being the executive director on it because the guy that was in the mix ended up getting fired two days before. And my executive director who was retiring and moving elsewhere had to find somebody quick and looked around and said to me, hey, you know, I know you come out of business school. Don't you want to make $24,000 a year and work for a nonprofit organization? And I was like, looking at my school loans going, really. But the fact is, is that over the, that was many years ago, solid range has changed. But the fact is that, particularly in the CDFI world, I'll tell you, in the CDFI world, we're about numbers. We're doing housing, we're doing small business, we're doing real estate, we're doing commercial development. We can't attract talent unless we have realistic salary levels. And they exist in the CDFI industry. They actually do exist. You know what I mean? So when you hear about, okay, we're here for a nonprofit. Oh my God, it's been poverty of wages. I came in my school loans. The fact is that that's no longer the reality of the nonprofit field. And there are great opportunities, you know, that extend from being on the board, all the way up to working, and more importantly, to leading. So $24,000 was a lot of money back when we were at home. So one is, I think it's important in opportunities like today, that we communicate that there are really great opportunities. One of the things that's really interesting, when I look at a number of the organizations, community organizations, the strongest, the viable, most impactful organizations, they are led by people with MBAs. They're led by people who have law degrees. They're led by people who just have an interest in strengthening communities, but they have fantastic credentials. And there's a passion there. One of the things about the field of community development is there's very low turnover. Because the work is so rewarding, and you can be compensated fairly. I think it's incumbent upon us, including you, who may have an interest in this field, though, to be strategic about how we think about it. As Roberto said, to look for opportunities to get some exposure, to get involved, one of the most valuable things we can do is get involved earlier as opposed to later in a variety of organizations and activities so we can gravitate towards and identify those that really strike a chord with us. So you're gonna weed some things out. And similarly, the organizations are going to ferret some people out and ferret out the best talent. The communities that are really benefiting the most from community development are very diverse. And so having diversity of all types in the organizations that are helping to solve the problems will help lead to better solutions for the communities and more sustainable. And I think that's something we should think about and keep in mind. Thank you, I think we use up our time, right? So I think it's time to queue in that. Hi, I'm Alice Zimmerman. I'm a dual master's of public policy and MBA student here in my final year. And I'm very interested in the work that you do. I came back to school to learn more about the intersection of policy and business and how we can do good and improve social outcomes by working with the private sector after several years working in the nonprofit world. Our first question today, start with, can you, this is for all of you, can you talk about specific aspects of the proposed tax bill that will impact your organization? Well, I guess I'll go first on that one. Part of my job is to originate low income housing tax credits investments for the bank. For those of you who don't know, the low income housing tax credit is probably responsible for 95% of the affordable housing that's built in this country every year, as the name denotes it is a tax credit. So if you take the tax rate from 35% to 20%, you're essentially reducing the value of the credit. What's that, 66%? John Chamberlain's up there, my math was never good, but whatever. So that's a significant hit. Another piece of that was that the house version removed private activity bonds. And I can't remember, I think it's one of the Republicans in Texas really never liked private activity bonds because they didn't understand why taxpayers had to subsidize all these stadiums and things of that nature, which I tend to agree with, that are being given taxes and financing. He didn't understand why that, but the part that they don't recognize or ignore it is that about 40% of the affordable housing through the LIH Tech program uses private activity bonds. So those are just two examples of how they would have a significant effect on the industry. I should have printed this out before I came, I meant to. But if the house bill went through, I think it would reduce production, I think approximately 40%, I think the estimates were. I mean, a significant amount of effect on the industry. And another one is I'll stop, is the new markets tax credit, which is something Dean Barr worked on when he was in the administration. That is a powerful program that's been responsible for not only producing great projects and NJCC has gotten several allocations over the years. And it would hurt projects, but it also hurts nonprofits, CDFIs, because those projects are one of the few ways that CDFIs and other nonprofits are able to get unrestricted fee income in significant amounts. So it'd be like a double whammy. And for everything I'm seeing, and hopefully this will change, it doesn't appear that the new markets tax credit will survive either with these bills. Low income housing tax credit will survive, but it just will be diminished unless there's some last minute change to what's been proposed. And Dudley, it might go without saying, but the low income housing tax credit, when you talk about that it's the primary source of equity for affordable housing, that's affordable rental housing. Affordable rental housing, yes. So that's for folks who aren't gonna own their own home, but they're renters, and that's really gonna hurt. I totally agree with Dudley. Also the historic tax credits are another program that's in jeopardy under the tax bill. But the private activity bonds, at least in New Jersey with the elimination of tax exempt private activity bonds would be devastating because that really in essence eliminates the 4% tax credit for low income housing projects. We hit our volume cap every year and to eliminate it, I just don't even know how much would really diminish our ability to develop affordable housing. The other thing less so is, New Jersey is a high tax state. And so the elimination of the state and local tax deduction would obviously have an impact. They're gonna cap property taxes at $10,000 at least. I guess it's gonna go to reconciliation. Not so much in the low income communities, but as we think about fair share housing and trying to bring affordable housing into higher opportunity areas, which is an important discussion as well, I could see that also having an impact. And there's also a cascading effect. I think I can't remember if they cap charitable donations, but when you're capping charitable donations, capping deductions folks can take, especially in high cost areas, that's gonna inevitably have an effect on how much folks are donating and nonprofits and the like. So it kind of all fits together. I would also think that the personal income tax deduction, the property taxes, housing taxes would have a huge impact and not only in high cost states. And one of the reasons I'm really concerned about that also is oftentimes people think that the only people who live in lower income communities are lower income people. And while it's a slippery slope because in some cases when non-low income people are buying in lower income tracks, we're talking about gentrification, but what we want is not to have concentrated poverty, we want to have mixed income communities and it's not just the communities that will suffer, but the families. And so this limitation, which will be permanent in the tax code, will be really concerning to me. Can a non-panelist add to your list? Sure can. So I think the other, the panelists I think have done an exceptional job describing the place-based effects. There are also income effects and health effects in the tax code that flow through disproportionately in the lower income communities. So if you look at the elimination of the amount of their coverage that is proposed in the tax legislation, the Congressional Budget Office estimates that it would affect about 13 million mostly low and moderate income households. And that would be quite significant effects in the community. Similarly with triggers on Medicare and Medicaid under the sequester or under the trigger provisions, those will have disproportionate effects on low and moderate income communities. Sure. All right, the next question. Well before I begin, just want to introduce myself. My name is Gabrielle Horton. I'm a second year here. I'm a second year master's student here at the Ford School of Public Policy. Thank you all for joining us. Thank you, Dudley. I promise that first question was not us trying to cheat on our memo that's due tomorrow. It's from the audience. But a bit of a follow up to that question. Wayne mentioned new delivery systems and Dudley, you also hinted at the complexity of current systems. So if the tax reform does go through, what do these new systems actually look like? So if one of you want to sort of take that, that would be great. I think the simplest way, the simplest part of that is on the local housing charge credit side, just means more subsidy is going to have to come from state and local government. So the program is inherently embedded with subsidy, but that subsidy gets spread out insofar that the more competition, the more valuable. The credit is the more private equity, private dollars are going to come into. And if you devalue the credit, which would happen under this proposal, that means there's going to be less equity per project. So the government's going to have to do more with the same amount of subsidy dollars. I mean, do less with the same amount of subsidy dollars. So you're going to have to spread those dollars around the fewer projects, which is unfortunate, but it's probably the only way the market will clear. So that's like the biggest one in my mind that's going to happen. State governments are going to have to do fewer projects with the subsidies that they have. States are going to have to do with less resources and they're in a starved environment as it is and to give you a sense of that. And part of it's politics, but part of it is appropriations. In 2005, I think we dedicated New Jersey $600 million to affordable housing programs. Some of it came from the federal government, you know, through the home program and CDBG and others. Last year, New Jersey dedicated $50 million. And in the meantime, 37% of our renters are severely housing, cost-burying, meaning they spend more than 50% of their income on housing, which is crowds out things like food and health and things of that nature. So what's that trickle down effect to that? Non-profits have to really rethink the way they do business. They have to become more entrepreneurial. They have to, can't rely on subsidy programs. I mean, we need them, don't get me wrong. But you know, if we're going to wait to sit around and wait for a program, we're not going to get much done. So it's going to really, I think, it does have a big impact on, I believe, on our nonprofit community development partners who develop a lot of this work. Can you speak about how your institutions specifically are addressing food justice and food access? And maybe, you know, it's on our mind, especially as we're thinking about Puerto Rico and some of the recent disasters. So when I was at Chase, we kind of pioneered with a group called the Reinvestment Fund in Philadelphia, pioneered the first kind of coined the term food desert. This was 2003, I believe. There was a state senator in Pennsylvania that came to the Reinvestment Fund and said, look, I just got the legislature to give you $5 million grant so you can start going across the state in places that don't have proper fresh food and things like that to build grocery stores. No one ever thought about it. No one ever done it. And I get a call from Jeremy Novak and Don Hinkle-Brown at the time to look, we need you to help us put together finances, so we took that $5 million and we leveraged that into, I believe, a $35 million fund. I can't remember now, it's too long, but I think that's right. And that's kind of where we started with that. So fast forward to a few years back and Michelle, first lady in the United States, Michelle Obama made one of her key initiatives, this whole thing about healthy foods. And a lot of the industry has kind of jumped on that and they're working on that to the point where we had a big launch event at the White House once. Again, at Chase, we helped lead a $100 million fund with the California Endowment and Capital Impact Partners and some others to do fresh food grocery stores across California. The initiative wasn't as successful as we wanted it to be, but it was still a big impact. And I think the Treasury, the CDFI fund, now gives CDFIs dollars and has a program specifically targeted at fresh food. So you see a lot of CDFIs, banks, and others partnering on that. And now it's become, it went from being a pioneering idea at the Reinvestment Fund to being a part of the infrastructure of the CDFI industry. So I think that's what's so great about the work that nonprofits and the CDFIs are doing, alluding to what Lila talked about, what happened with the banks internally. A lot of times we would do R&D internally for products that became mainstream products within the bank. Same things happening for CDFIs. CDFIs may at some time or another R&D program that becomes something mainstream across their industry as well. One of the things I admired a lot about that program, the Fresh Foods Initiative and Responding to Food Deserts, is that it was a permanent solution when it was an investment in communities, in some cases, that hadn't seen a grocery store ever that only had bodegas or corner stores, or that hadn't had a new retail outlet for food shopping in decades. A lot of times what we have, and it's very important but it's not a permanent solution, is a response to a specific disaster which comes in the form of philanthropic dollars and mobilizing volunteers to help. But after the emergency is passed, we don't have a long-term solution to providing food, to providing jobs, to providing a neighborhood economic engine. And so having an initiative like the one that Dudley spoke of is critically important to the long-term viability of communities. And I think that's an important piece that I didn't even think about because the response to Fresh Foods did that. The stuff that Wayne and his team is working on, similarly they're trying to develop, not just because the work that Wayne's doing actually resulted first out of Superstorm Sandy, which was obviously a big issue on the East Coast and a lot of folks approached from Jersey and the Capitol do some emergency work about, what can you do? And that was kind of I think the part of the germ, not completely, but part of the germ of idea for the other issue about, well, let's try to figure out how we purchase things in bulk and have a larger effect. So that's a very key part of the work that we're trying to do in this industry. Just briefly, the food issue, I talked at the beginning about partnerships and collaborations that we've partnered with the Reinvestment Fund on a number of food, shop, supermarkets, food warehouse distribution centers using our new market tax credit. But it is a complicated issue. I live in a low income community and every morning when I'm going for my coffee, I have kids on my block buying Doritos and clients like 630. I'm like, guys, you guys gotta need to eat that stuff at 630. So I think it's part in the schools as well. And so we finance a lot of charter schools and a lot of charter schools have nutrition programs in their schools. I think education is a key part of nutrition and health and we can finance some of the place-based things around that. One of the initiatives that we're beginning to work on in Germany is around, there's a Bodega Association being formed in Dudley City and Jersey City around how we can potentially finance more fresh fruits and vegetables. I didn't realize 100 Bodegas in that area. And so it's an evolution. In terms of disaster recovery, when we did our Sandy Recovery, FHA did the first ever direct sale where they ended up directly selling to us 517 loans in the most impacted Sandy Recovery areas as the first time you ever direct sale. They charged us to a premium, but it was not competitive. Because O&B made them charge you. Yeah, Office Manager and Budget made it to premium, but we thought it was important enough to control the assets. And I think another common thing we're talking about here is getting away from products and things and thinking about systems. Because the fresh fruit, what's happened in evolution of how the industry works in fresh fruits, you're thinking about, okay, you can't just build a grocery store. You have to have distribution centers in places that make sense. So in the past, if you told someone community development organization and nonprofit should help fund a distribution center, they're like, well, that's not community development. But yeah, if you're trying to build systems that change people's lives, you have to have these connectors. You have to be able to fund infrastructure as well. Some of the folks are doing things, I know in Detroit they're doing it in some of the other living cities, they're doing the hydroponic farming systems. They're helping folks use abandoned warehouses to grow lettuce and all those type of things. So I think that's another way the industry has evolved, thinking about systems versus just thinking about this is housing, this is small business or whatever. We really, I think of changing not enough yet, but I think we're getting to a place where we're thinking about the systems that help support communities. All right, this next one is from Twitter, and I love Twitter. So I'm super excited, we've got some posts from there. So someone said, passion is great, but how do you evaluate whether local nonprofits truly represent the community? And I'm thinking about this in the context of how we're talking about making sure bodegas, which I also really do love, have access to fresh produce, right? How do you know that that community, wants to keep their bodega, but they also want all these other amenities that obviously lead to better outcomes as well. And also thinking about your organization scaling nationwide, Roberto, how do you identify these local partners when you're based for the most part is in San Fernando Valley? How do you know that someone in Iowa or Massachusetts is really connected to the communities that they speak about? So if maybe one or two of you all could speak about some of the mechanisms and tools you actually use to evaluate that authenticity. I mean, we went into Miami, I spent a number of months talking with the SBA, talking with pretty much every nonprofit like Identify that had a handle on small business, just talked to them all. Just didn't come in with a kind of preset notion in mind, just talked to them and got a sense of what the challenges were who was doing the lending, who wasn't doing the lending, understanding that there was a great micro lender in the community, so he didn't need me in there to do micro lending, that they basically had other SBA lenders. What they really needed was that 50 to $250,000 loan that a bank can do, and that's what we focused on. When we went to, we were asked by a bank to do a capital access expo in Las Vegas. Went to Las Vegas, started me with all the different nonprofit organizations, and in the middle of one conversation, I had a nonprofit who simply said, look, we're out of money, we're gonna close down. Will you acquire us and bring us into your organization? And that just came out of an organic conversation in terms of what was going on in the community and what is needed. The thing is too is that, I always get weird about the word represent. I would never say that I represented the San Fernando Valley, much less the state of California. Well, I consider myself as a technician. My job is to respond to a need. There's a need for capital access, there's a need for small business lending, I can speak to that need. And I can basically help provide products and programs that speak to developing entrepreneurs and growing small businesses in communities. And so I always get, that's more the rule for nonprofits. I get really scared when you get nonprofit organizations who start talking about I represent this or I represent that. Because that's not the mission of a nonprofit organization. The mission of a nonprofit is to create change in a certain area of human need. That's our responsibility, that's where we're created. And the fact is nonprofits, and I go back to what Dudley said, he reminded me over and over again, nonprofit is a tax exempt designation. It's not, beyond that, the organization is created based on our mission to serve a particular need. And to the extent we can do that and create impact, which increasingly becoming more and more important and more and more questionable, then we're being effective and then we're really speaking to having accomplished our mission. Yeah, I was at a meeting with a president of a foundation in New York a while back. And she told me that her view was the green development movement was dead and needed to move on. I obviously totally disagree because I still think local community development corporations work in markets where the private markets don't wanna go and government's incapable of going, right? So we work in New Jersey, what we try to do is we take a comprehensive review of how we work in neighborhoods. We don't do a lot of one-off stuff, right? We work with groups that look to comprehend, we think about it comprehensive around housing, around education, around food, around economic development. In order to do that, the groups, and we do have a couple of really good programs in New Jersey, the neighborhood revitalization, tax credit program, which really forces the nonprofit groups when they get resources to really dig deep around resident engagement. And there's a lot of that type of planning that goes on. And those are the best outcomes in terms of neighborhood revitalization when it comes from the community and the residents. And we do have a lot of that in New Jersey. I'm just concerned more that the sector itself is weakening, so they're not gonna be able to do as much as they can and should be able to do. And I think a key piece of it is very simple listening. The work that Wayne was doing there, and when I was still board chair, they would come to me, Michigan called, or North Carolina called, or Florida called, and we wanna go into that state. And my question was always like, who are we gonna partner with? Because you never wanna be parachuting from another area to do work where other people have been for a long time. And I think that's one of the reasons the programs have been so successful because we were coming in to partner with folks who are on the ground that had better expertise and being humble about it and understanding, look, I don't know everything about what's going on here. So I need someone that does and has been here, that's been engaged, that know where the, although pitfalls are and know who the good partners are. So it's really having the humility to ask and the ability to listen that I think is really important in getting to that place. No, I would agree in having people on the ground in various communities. I had the good fortune of working for an organization that had a presence in two dozen states. And I've never seen a CRA evaluation didn't say that affordable housing was a critical need in that community. But they also go into other needs. And those needs might not be that you some cities have wonderful education systems and others do not. Some have a thriving small business environment and local economy and others do not. So you really have to have people on the ground and have a process and a system in place to get the input, to filter through it, to prioritize, to align it with your institutions, business objectives, your strengths, I think, and narrow it down, because no individual institution is gonna be all things to all people or to all communities. So really looking at what are the needs, how do they align with your business objectives, your business capabilities and strengths, and where you can make an impact. And where there's a need where you're not strong, do you have the right relationships and connections to help refer those needs to someone else? And ideally, we can address multiple needs within a community and have an overall impact. Great. Wayne and Layla, you've both spoken a little bit about recruiting the next class of community developers, and we are a room full of students here. And so it's fitting that one of our question is, what skills or qualities do you look for in a person that you're recruiting into this field? And what makes them most successful? You know, it's interesting, we have a lot of our younger generation came from urban planning of public policy, graduate schools. They weren't necessarily trained, say, in lending or in real estate development, but they were obviously committed to economic and social justice issues, which to us is a really important starting point. You have an ability to think critically and analytically, we think is really important. We think we can train, right? So it's not a matter, we're not looking for people that necessarily come in with a credit background or a lending background or a real estate development background, but we've been really exceptionally fortunate to really, and again, having our fellowship program, I think, has also been helpful. But that's really, it's more around there, with their commitment and education and passions around. We'll do the training. Yeah, I would agree. I've always said that I can teach anyone CRA. I can't teach people if they don't have the desire to be collaborative, to be innovative, to think strategically. Sometimes you can help people in that way, but really you have to have an interest and a passion and being a CRA manager provides a unique insight and an opportunity to collaborate with people, whether they're lenders, whether they're responsible for investment, whether they're in the small business space, the housing space. I have colleagues with legal backgrounds, with business backgrounds, with education backgrounds, a wide variety of skills, but what they have is what kind of Wayne indicated, is a desire to take their academic skills and put them to use to make a difference in a community. What I looked for in my team was people who had a commitment and a desire to balance kind of that double bottom line, the mission and the business objectives, and people who look for a way to say yes, as opposed to reasons to say no. So to really look at things, and you're not gonna say yes to everything, but to look at things creatively, not just look at things the way we've always done it, but how can we lead towards change? And that requires some flexibility and some willingness to collaborate and to come up with innovative solutions. Three things. Accounting. Get, you know, know how to look at a balance sheet and look at a financial statement. Real basic, not that whole FICO, Lyco inventory stuff. Just know how to work your way around a balance sheet and a financial statement. And I didn't make him say that because I've been saying that every class. And I would agree with you. Because in some mix, looking at a development opportunity or looking at a small business opportunity or looking at a program, the ability to build a budget is huge. Good writing skills, being able to write well, key. Whether it's because of proposals, whether it's because of requests, foundation, government, financial institution, being able to write well. And I spent most of my time as a president editing everybody else's work, you know. And then lastly, work ethic. Gotta have a good work ethic. I mean, I'm not gonna tell you that. I mean, nowadays the salary levels are much fair than they ever have been in this field. But the fact is, you know, many times you're gonna find yourself doing the work of two people. Plus, you know, these organizations that just don't have the ability to hire the way corporations and universities can. You know, and so, you need to be good work ethic and being able to not be afraid to put in those hours and work that much harder. It's always something identified and appreciated by those of us who manage it. All right, we may have time for one more question or is this the final one? Okay, so question from an audience member. Is some studies show direct cash gifts can create better outcomes than programs or micro loans? Do you have thoughts about this? I think the answer to that is yes, that's true, but it's not a political reality in the world we live in. If you look at, that's why I make the joke about all the lawyers and accountants, kids going to Yale and Harvard, because the system we create makes those intermediaries mandatory in order to get everything done. But for reasons that we can all talk about at length, we are a nation that don't like to give money directly to poor people. We want them to get accredited, we don't do this, gotta do that. It'd be more efficient, probably less costly if we just cut people checks for so many of these things, but we just, it's an etymode to the American way, so I'll just be blunt about that. The city in North was last year, I guess it's had a Valentine's Day sale. That's right, that's a good one. And so the idea was that they were going to sell a lot of the vacant lots in the city for a dollar. Lines out the door, people lining up to get the lots. So now fast forward 18 months later, not one house has been built. And not only that, now they're burdened with paying taxes they can't afford. And so they're trying to figure out how they can unpack this and maybe put it in the hands of a nonprofit to develop the housing and then. So I, yes, I mean, any sort of donations is incredibly helpful, especially around disaster recovery. One foot of that way would be a good example, I think. But I do think that promoting economic mobility for families, it's place making economic mobility to Dean's point about economic mobility does require, I think, assistance in terms of trying to help people deliver some of those outcomes in my mind. In another way of saying it, expertise does matter in some regard, so. Great, I think this will be our final question. Lack of financial literacy often leads consumers into unfavorable loans, contributing to foreclosures. How can we improve financial literacy in this country and in the communities that you work in? Wow. Can I be real clear? You know, let me guess on a soapbox. Go first, brother. The proliferation of online lending, whether it's consumer, whether it's small business, anything about online lending, is way too much money, looking basically to provide capital for 24 hours to folks who, in the industry, was very unregulated. Right now, I think the thing is that, while we do need increased financial literacy and starting at a very young age, i.e. my daughter in middle school, we do need to have that. There needs to be an environment that says that we will not allow exploitation of people. That we will, you know, the amount of regulation that banks face today is huge. The lack of regulation with a lot of these funding sources is ridiculous. And so the thing about it is that I get concerns sometimes that we blame the person and not the system, for not, you know, to make that possible. And so I think that one of the things that I've worked with organizations on has been trying to get online lenders just to tell you what their actual APR is, to tell you what their actual fees are, just to provide the information. Because people aren't stupid. If you tell someone it's going to cost them 300% interest rate, they're not going to buy in. If you tell them it's going to be this kind of fee, they will not buy in. So the thing about it is that just the transparency in that product and the transparency on financial literacy, that is a huge part of the issue. I also think, and Leela knows this better than most, that she dealt with a lot of community groups that really came at our bank and other banks about, so when bank one and Chase merged, bank one I think had a huge, big business with pawn shops and check cashers and all the stuff. And a lot of the community groups basically were really adamant about that we had to get out of that business. And I think eventually the bank got completely out of the business. But the unintended consequence of that is that when you have regulated institutions competing with these non-regulated institutions, this competition drives down pricing, may make it a little bit fairer. Now you get every regulated institution out of the business, it's the Wild Wild West. So they kind of won the battle but lost the war, the community groups. They got all the banks to stop doing this stuff, but they have no lever against Chico's cash check cash. Chico doesn't care, protest them all you want. See actually Chico's not even there. Chico's probably in Boca Raton playing golf. So that's some of the things folks aren't strategic in thinking about when they, sometimes when we get out the pitchforks and the placards and things like that, they're not thinking about systems all the time. But the thing, and this is one of my pet piece when these type of questions come up because there's a couple of things I like to say is that low income people aren't done, they're just poor. They make extremely rational decisions based on their life. So you get a lot of nonprofits and CFIs are always trying to compete. Oh, the rates like we're poor, so the rates on check cashing are, this is terrible, why do these people do this? Because it makes sense for their lives. It doesn't necessarily make sense for your life with the savings account, college degree, but for what they do, it makes perfect sense. You're competing on price, they're competing, they're worried about convenience. So a lot of times we have a paternalistic way of looking at these problems. And the last thing I'll say is the best way to know how to manage money is to actually have money. We somehow expect poor people to have all this experience in this financial literacy about what the best way to save. If you don't have money, saving is more esoteric. And I'm not trying to be facetious, you still need to save and things of that nature, but you won't know how to do a trust for your children unless you had to be in a position to do a trust for your children. It's just never gonna be anything you're gonna do if you don't have excess money to do that type of things. You're not gonna know how to do all the fancy things that folks that have money to leave behind do unless that's something you actually do. So it's kind of, I always find it odd when we talk about financial literacy, just like we talk about education, these are poverty issues, but we don't wanna talk about poverty so we talk about sometimes things that are insilient to them. So it's just like, yeah. I don't think, no, don't leave if I could, and I'll try not to get on my soapbox because when Duffy and I start going back on soapboxes, it never ends, but we have a lot of fun. Financial literacy was one element, but there were a lot of causes to the foreclosure crisis. And my soapboxes, we, again, can't blame it on one factor or one group of people. And one of the things that we should also keep in mind is what happened with unemployment and who unemployment hit first and who it stuck around with for the longest amount of time. So folks who were already living on the edge, making their mortgage payments but they didn't have six months, 12 months saved up and they lost their job and it took them a long time to recover, were very vulnerable in that time period. And so again, one of the, you know, someone I know says the best community development program is a well-paying job. If you don't have transferable skills, if you don't have the ability to recover from or sustain an a temporary interruption in employment or a downsizing that means that you take a less well-paying job, it's very hard to maintain your mortgage and your housing payment. So there's a lot of connectivity to broader economic variables that are occurring, which makes the opening question we started with about what's gonna be the impact of the tax proposals on community development and on families. A really interesting question, because when you start to think about some of the downstream impacts of what this will result in, if all of these corporate savings aren't reinvested in better paying jobs, I think we're gonna see many more unintended consequences that are being discussed today. I would just add, not much more I can add to that other than if you really look at the data from the foreclosure crisis, that well-counseled home buyers were a slight default rate as opposed to people who were not counseled and that's absolutely the fact. I mean, is this myth that CRA caused that the foreclosure crisis couldn't be further from the truth? And even in our mortgage program, we've modified now 600 mortgages for families, $60 million in principal reduction. All of them are counseled. We've had three redefaults, where the redefault rate on mortgages are usually like 20, 30%. We've had less than 1%. And I attribute that to the great work our counselors do. And there's counseling and there's counseling, right? The ones that are like three hour counseling programs or you see that all the time, that's not counseling. It has to be really an in-depth commitment around financial counseling to make it work. And I think the data absolutely bears that out. So let me just say, what a great and interesting conversation. Please join me in thanking our entire panel. We add two other things to thanks. One is Ray Waters is here in the audience I didn't see before. Ray runs the Detroit Development Fund, which is a wonderful CDFI in the city of Detroit. So those of you who are trying to combine your interest in the community development and finance with making a difference in the city of Detroit, come bother Ray at the reception for a job. And the last thing is please join us in the great hall for a reception in honor of this panel. And thank you once again.