Address by Under Secretary of the Treasury Wally Adeyemo at the National Bankers Association Annual Conference
As prepared for delivery
Thank you all for inviting me today, and a special thank you to Nicole, who was recently chosen to serve on the Treasury Advisory Committee on Racial Equity. I know we will benefit from your expertise and ideas on how we can build a fairer Treasury and economy.
I also had the pleasure of moderating a panel with Nicole at the Freedman Bank Treasury Forum last week. For those unfamiliar, the Freedman’s Bank Forum is an annual conference where we bring together private industry, government leaders and policy advocates to discuss opportunities to work together to promote racial and economic equity, and to reflect on the work we do to advance this goal every day.
The state of our economy on day one of the Biden administration underscored the importance of prioritizing equity in our economic agenda. The pandemic has had a huge impact on our economy. In January 2021, we were still 9.5 million jobs below the pre-pandemic peak and hundreds of thousands of businesses had closed in the first year of the pandemic. These challenges were particularly acute in communities of color, where black, Latino and Native American workers were more likely to lose their jobs as the economy contracted. These differences in the economic impact of the pandemic on different communities were familiar and predictable. Because what global disruptions like COVID do is add fuel to a flame. They illuminate and exacerbate existing disparities.
At the Treasury, as we were tasked with administering more than $1 trillion in US Bailout Relief (ARP) funds, we knew we urgently needed to get money into the hands of those who needed it most. But we also knew that, if done correctly, this funding would be an opportunity to set us on a new path, a path to greater long-term sustainable economic growth.
Minority and underserved communities in this country are not held back by a lack of talent or ideas. Their potential is too often limited by the lack of opportunities. Unleashing the economic potential of these communities is sound economic policy that will benefit everyone. This is what Secretary Yellen’s phrase “modern supply economy” means – investing in expanding our labor supply, in sustainable growth, in research and innovation and in under-resourced communities.
Minority Depository Institutions (MDIs) – including the institutions represented in this room – are essential to this work. As essential – and sometimes the only – capital conduits in the communities they serve, MDIs are able to drive wealth creation through access to mortgages and small business loans. This is why the Emergency Capital Investment Program (ECIP) was such a priority for us.
And I’m happy to say that, while we still have a long way to go, we’ve made significant progress together thanks to ECIP funding. As you all know, Vice President and Secretary Yellen recently announced that the Treasury has closed and funded $8.28 billion in ECIP investments. More than $3 billion of this amount was invested in MDIs, including more than $1.1 billion in Black MDIs and $1.3 billion in Hispanic MDIs.
These investments are transformative for CDFIs and MDIs, allowing them to expand their work and expand their impact and reach in financially underserved communities that in many cases would otherwise struggle to access the capital they need.
Earlier this year, on a trip to Memphis, I had lunch with eight black women small business owners to talk about the state of the economy, their businesses, and where they needed support. Their stories wouldn’t surprise you, but they underlined how important your work is. For these women, the difference between securing a life-changing contract and closing their business for good was as simple as finding a bank willing to open a line of credit. In communities across the country, your banks provide this essential financing and contribute to our economic success.
ECIP is just one of a series of recent landmark investments in CDFIs and MDIs. Last year, the CDFI Fund deployed $1.25 billion under the rapid response program. And through our CDFI Fair Trade Recovery Program, we plan to announce $1.75 billion in grants by early next year. Over the past year, the CDFI Fund has also deployed hundreds of millions through its Basic Financial Assistance Program, Bond Guarantee Program, and Capital Magnet Fund, among others. And through the American Rescue Plan’s Small Business Credit Initiative, the Treasury is deploying an additional $10 billion, including to support small business lending through CDFIs or MDIs in underserved communities. , with the expectation of tens of billions of dollars of additional private capital mobilized by federal SSBCI funding.
We know that, as impactful as ECIP and these other investments are, they will not solve all of the challenges facing Black-owned banks or financially underserved communities. We still have work to do together.
Mission-driven financial institutions need more than federal government capital to reach their full potential, both in the scale of funding and the types of capital they need. We are engaging and working with the private sector to meet this need. That’s why we’re excited about a new initiative the Vice President announced this summer: the Economic Opportunity Coalition. The COU brings together the private sector and the social sector to work together to increase the historic federal investments we have made. One of the EOC’s specific areas of focus is helping CDFIs and MDIs make the deposits they need to maintain their equity-to-asset ratios. Last week at the Freedman’s Forum, EOC members announced commitments of $650 million in deposits that they will transfer into MDIs to help them manage their balance sheets and grow the ECIP investments we have. facts. And that’s just a down payment on the way to a goal of shifting $1 billion in deposits to MDIs.
Public-private partnerships like the EOC, and like our collaboration with the NBA through our administration of the ECIP program, are critical to achieving our economic agenda. This allows us to better identify and respond to needs where they exist, unlock more capital than we could on our own, and hold each other accountable for the commitments we have made. I look forward to our continued collaboration on this front and thank you for being with me today.