Jun 15, 2021
Kamala Harris, Janet Yellen Providing Capital to Small Businesses Speech Transcript
Vice President Kamala Harris, Treasury Secretary Janet Yellen, and others gave remarks on providing access to capital to small businesses on June 15, 2021. Read the transcript of the speeches here.
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Speaker 1: (00:03)
Americans have spent a year grieving. We’re here today to embrace hope. In many communities, the pandemic destroyed hard-earned life savings, devastated the dreams of small business owners, and forced people to leave their homes. The community development financial institutions, CDFIs, that I represent have been on the front lines of this upheaval. Community development loan funds, credit unions, and banks leaned into the crisis. We provided essential financing to Black and Latino and native and rural and other communities that were underserved by mainstream finance, the communities most effected by the pandemics economic impact. There are countless examples of CDFI staff working around the clock from home to help their communities and customers.
Speaker 1: (05:14)
In New York City, Renaissance supported immigrant Asian American owned businesses whose sales plummeted as COVID-19 cases and racist attacks surged. In California, XEO and Opportunity Fund issued vital paycheck protection loans to struggling businesses, many owned by minorities who didn’t have formal banking relationships. On the Texas border, Affordable Homes of South Texas kept people in their homes and helped family buy new homes for their shot at the American dream. And on native reservations, Northwest Native Development Fund in Washington state, and [inaudible 00:05:47] fund of Colorado helped native reservation-based lenders uplift native enterprises while COVID-19 was escalating. And in the Mississippi Delta, Hope Credit Union made more than 2,500 paycheck protection loans, totaling 81 million. Those loans saved more than 10,000 jobs.
Speaker 1: (06:05)
Overall as PPP lenders, CDFIs vastly exceeded our set aside to get more than 30 billion to rural and urban and native small businesses that were missed in the programs earlier chapters. Every federal dollar is precious to the CDFI industry and to the low wealth communities that they serve. For 25 years, our CDFIs have used federal investment and grant dollars to create jobs, to start and grow small businesses, and to support childcare and healthcare facilities. We know how to use public capital and our loan loss rate is historically low and our impact is astoundingly high. Yet for 25 years, federal funding has been small, and we’ve been underfunded and the need for federal investment has been severe. And today, the country’s heard our call. Today, I have the distinct pleasure of introducing a tireless advocate for underserved communities. Vice President Kamala Harris is recognized as a warrior for justice.
Speaker 1: (07:06)
I’m proud that Vice President Harris understands that CDFIs provide access to capital for marginalized entrepreneurs and communities. I’m proud she fights for un-banked and under-banked communities, and I’m proud she seeks to lift the economic status of individuals and communities that have been left out. I’m honored today to introduce the Vice President of the United States, Kamala Harris. Thank you.
Kamala Harris: (07:32)
Thank you, thank you, thank you. Well good afternoon and thank you, Lisa. You have been an extraordinary leader. I have talked with many of our CDFIs, also known as community lenders, around the country and 201, they talk about your support and your leadership, especially during some of the most difficult times. So I thank you and I’m very honored to be with you as we make this announcement today. And of course, thank you to secretary Janet Yellen and Senator Mark Warner and chairwoman Maxine Waters for your leadership. Today as we encourage everyone to get vaccinated all across our nation, students are going back to school in person, people of faith are back in pews, and small businesses are back open.
Kamala Harris: (08:20)
As we begin to emerge from the pandemic, we have the opportunity to take stock of where we’ve been and where we’re going. And so this much is clear, the pandemic exposed the flaws, the fissures, and some of the failures in our economy. It has accelerated, in many ways, the inequities in our economy. And so when we took office, President Joe Biden and I knew that more than repair, we must reimagine our economy. Small businesses, of course, are at the center of this re-imagining. Small businesses create jobs. Small businesses create…
Kamala Harris: (09:03)
Small businesses create jobs, small businesses create wealth, small businesses employ half of America’s workforce, and small businesses keep our nation competitive. And small businesses are critical, therefore, to our nation’s future. Right now, small business owners don’t just need relief, they need access to capital. That was true before the pandemic and it remains true today. I recently met with a small business owner named [Lorena 00:09:34]. She’s the owner of an artisan empanada business in Colorado. She started her business, as so many have, in her own kitchen. But when she tried to get a loan to expand, the banks used a word she had not heard before. They told her she was, in their words, not bankable. Well, they were wrong. Through hard work, she proved them wrong, and her business has since expanded to multiple locations, and she has employed many people in her community and mentored many more. Lorena is not alone.
Kamala Harris: (10:13)
I also recently met a small business owner named Rain. She owns a catering company in Oakland, California. And when she first started out to cater, to deliver her wares, she needed a van, but she couldn’t even get a small loan from a traditional bank to purchase that van until she went to a community lender that agreed to support her and her small business. And here’s the truth. Traditional banks have not always seen or understood the vision of women small business owners, small business owners of color, small business owners who serve low-income communities. Sometimes, their vision is something outside of the experience of the big banks to understand and see. Community lenders, on the other hand, were founded to see that vision, to get it. And over the past months, I have been in direct contact with many of the most active community lenders in our nation.
Kamala Harris: (11:20)
Those who serve rural communities in Oregon, urban communities in California, those who serve low-income communities in the Mississippi Delta, tribal communities in the plains of South Dakota, where for example, native women are making quilts that are important to their community, are part of the tradition of the community, that are marketable in their community, and needed a community lender to recognize that fact, to support that work. You see, community lenders understand the value in providing access to capital directly to communities. And because they do, they add value to those communities, and by extension to our entire nation, which is why our administration is making a big investment in community lenders, and actively working to increase community lending capacity. We believe that American entrepreneurs deserve the opportunity to start and grow a business. When they’ve got a good idea, let’s invest in them. We all benefit. I recently, just a couple but weeks ago, hosted two of the survivors of the Tulsa race massacre.
Kamala Harris: (12:36)
And as we all know, we commemorated 100 years since the passing of that great tragedy. And so two of the survivors, one 107 years old, mother Viola Ford Fletcher, and her younger brother, 100-year-old Mr. Hughes Van Ellis, came to my office, and we talked about the Greenwood District and Black Wall Street. We talked about this essential principle of self-determination, and we talked about how access to capital can help small business owners and workers alike to determine their own future wherever they live. And that is why helping small businesses access capital through community lenders has been a focus of mine for a very long time now. In fact, one of the last actions I took in the United States Senate was to work with my colleagues, Mark Warner is here, to secure $12 billion for community lenders as part of the COVID-19 relief bill. And of course, I did not do this alone.
Kamala Harris: (13:43)
It was a partnership with Leader Chuck Schumer, Chairman Sherrod Brown, Ranking Member Mike Crapo, Senator Mark Warner, Senator Cory Booker, and Chairwoman Maxine Waters. It was a full team effort, and today I am proud that we are announcing the Rapid Recovery Program, which that bill set up and is now operational. $1.25 billion will be distributed to community lenders through this program. Lenders can use these funds for critical needs, such as to recover from the pandemic themselves. Many of these community lenders, you can think of them as small businesses of their own. They’re based in the community. They need the support, they need resources, they need technical assistance, so that’s part of where this will go.
Kamala Harris: (14:32)
It will help folks pay their own workers, create new products, and get more money out the door to small business owners. And I’m going to give you a website. Lenders can visit treasury.gov for more information. And now, I’m honored to hand it over to Secretary Yellen to share more details. I will tell you one of the first topics she and I discussed even before our inauguration, was how to increase community lending capacity. We’d been working together, our teams have been working together on this issue ever since. I know the Treasury Department has been hard at work to get the Rapid Recovery Program up and running. I thank you, Madam Secretary for all you do, and I will now pass the microphone to you. Thank you.
Secretary Yellen: (15:27)
Thank you. Thank you, Madam Vice President. Thank you for hosting us, and more importantly, thanks for elevating this issue. As the vice president mentioned today, treasury is awarding $1.25 billion to 863 community development financial institutions across the country. These CDFIs include banks, credit unions, and loan funds, which play a very important role in our financial services ecosystem. They serve people in places the sector hasn’t traditionally served well. About 20% of CDFIs are headquartered in what are termed persistent poverty counties. About 40% are headquartered in majority minority areas, namely communities of color, where they make loans to help people start businesses or buy homes. The vice president is right, this is one of the first subjects she raised with me, the importance of CDFIs, and it’s exactly the right place to focus our attention, because these questions, who connects this credit and capital and who can’t, those questions are at the root of many long-term structural problems in our economy. For most of the 20th century, our economy was undergoing a convergence. There were richer areas of the country and poorer areas, but the poorer areas were catching up with the richer ones. The country was rising together. But today, that’s less true. There’s a divergence among local economies, and one of the trends we see is that some places don’t have access to much capital while others have an abundance. In fact, some forms of investment are heavily concentrated within just a handful of cities. Last year, for instance, 71% of all venture funding went to just four metropolitan areas. The disparity in who can access capital and where also falls along racial lines. About 16% of America’s population lives in areas that-
Secretary Yellen: (18:03)
… percent of America’s population lives in areas that are majority minority areas, but that 16% of the population only receives about 9% of investment from mainstream financial institutions, and that’s part of the reason the racial wealth gap persists.
Secretary Yellen: (18:22)
When I started studying economics in 1963, the average black family owned 15% of what the average white family owned, and that number hasn’t changed in half a century. It’s as close to a constant as we come in economic data, and this is a very unjust aspect of our economy. The vice president made that very clear, but I would also add it’s a very unhealthy aspect of our economy.
Secretary Yellen: (18:56)
If you were designing a well-functioning American economy, you wouldn’t have 70% of capital in any form flowing to just four cities because that’s not where 70% of the opportunity is. We as a country are missing out on so many venues for growth because our capital is bottlenecked by race and region. Research has shown that decreasing barriers faced by African-Americans would produce substantial gains.
Secretary Yellen: (19:32)
This is why even if you never apply for a loan from a community development financial institution, you should care about them. These institutions serve in places that the financial sector historically hasn’t served well, and that lifts our whole economy up. By one measure, every dollar injected into a CDFI catalyzes $8 more in private sector investment. That means that today’s announcement might lead to an additional $10 billion in investment.
Secretary Yellen: (20:10)
I know the president and the vice president ran on a very ambitious agenda, build back better, unwinding systemic racism, creating an economy that works for everyone. I believe this is what that looks like in practice. By channeling more capital into CDFIs, we’re translating those ideals into reality, and this is just the beginning. The $12 billion Treasury is now allocating for community lenders is more funding than has flowed through the CDFI Fund since its creation in the ’90s.
Secretary Yellen: (20:54)
With that, I want to thank the entire CDFI team that’s made announcement possible, and I want to echo the vice-presidents thanks to all the members of Congress who helped get this done, including Senator Warner and Chairwoman Waters. And Madam Chair, let me now turn it over to you.
Maxine Waters: (21:22)
Good afternoon. Thank you for having me today. Before I began, I’d like to thank Vice President Harris, Treasury Secretary Yellen, and Senator Warner and Mrs. [Mencia 00:21:36] for their unwavering support and efforts to strengthen our minority depository institutions, that is our MDIs, and community development financial institutions, the CDFIs. These diverse and mission-driven institutions have been instrumental in ensuring that critical aid reaches small businesses, vulnerable communities, and those in dire need during the pandemic.
Maxine Waters: (22:04)
Over the past year, Senator Warner and I have teamed up to pass historical legislation, directing the federal government to make capital investments, grants, deposits in our nation’s MDIs and CDFIs. Because communities of color have been among the hardest hit by the pandemic, I worked with Senator Warner to include key provisions of my bill, the promoting and advancing communities of color through Inclusive Lending Act in last December’s COVID 19 stimulus package.
Maxine Waters: (22:41)
I’m pleased that this issue is not only bicameral, but also bi-partisan, as I was also able to work with Senators Crapo and Brown, Representatives Meeks, and my committee’s ranking member, Mr. McHenry, to secure an unprecedented $ 12 billion in capital investments and grants to strengthen MDIs and CDFIs. Supporting our nation’s CDFIs and MDIs has long been a priority for me.
Maxine Waters: (23:14)
Over 40 years ago, I began working with CDFIs in my home state of California and was a founding director of the CDFI Pacific Coast Regional Corporation. The lessons I learned back then are just as relevant today. CDFIs are critical lenders for our communities of color and infusions of capital, like the one beginning announced today.
Maxine Waters: (23:39)
I am so proud that this is a game-changing operation. So I’m pleased to be here today where the initial release of $1.25 billion in CDFI and MDI and applaud the Biden-Harris administration for keeping their promises of an equitable recovery to vulnerable communities.
Maxine Waters: (24:04)
So under my leadership, my committee will continue to look at these issues. CDFIs are high on our agenda and we’re continuing to strengthen them and make them more accessible to our communities. While this is a historic investment, our work does not end here. According to one news report, between 66% and 79% of minority business owners said that their firms financial conditions were fair or poor during the pandemic. Whereas only 54% of white business owners endorse their firms being in one of these conditions. I see this investment as a down payment on what we need to restore our MDIs and to support our CDFIs.
Maxine Waters: (24:52)
Earlier this month, we commemorated the 100th anniversary of the Tulsa race massacre that destroyed black-owned businesses and killed hundreds of black men, women, and children. So as we approach the commemoration of the end of slavery in America on Juneteenth, we must acknowledge that we carry the responsibility on our shoulders to make sure that progress is made. That black and Latinx small businesses remain open and not boarded up, that pandemic relief reaches every family and every community, and that our recovery is equitable across the country. So I thank you once again for inviting me, and I look forward to continuing our work on behalf of CDFIs and MDIs.
Maxine Waters: (25:41)
Now, I would like to introduce someone who has been a long time advocate for CDFIs and MDI and someone I have worked closely on with this issue with my colleague, Senator Mark Warner.
Mark Warner: (25:59)
Well, thank you, CHairman waters. I am always willing to be your wing man on this issue. Maxine Waters has been about fairness and equity in our country for 40 years, and she has a record and legacy of support and she made clear this was not just about CDFs, but on MBIs, minority-owned institutions, particularly black-owned institutions. We lost most of those black banks during the 2008, 2009 financial crisis.
Mark Warner: (26:27)
Thank you, Vice President Harris for inviting me. Vice President Harris was then Senator Harris, she and Cory Booker and Chuck Schumer and I put together this bill, Jobs and Neighborhood Investment Act, as the Senator Harris mentioned. We actually had strong Republican support. Mike Capo, the then chair of the Banking Committee and about a half dozen other Republican senators joined in this effort.
Mark Warner: (26:52)
Secretary Yellen, it’s always great to be with you and you have made sure that this idea is now being implemented in a way that’s fair and appropriate, and Senator Yellen’s …
Mark Warner: (27:02)
… that’s fair and appropriate. And Secretary Yellen’s comments, she made mention the fact I used to be a venture capitalist. The numbers are even worse. The idea that 70% of VC money went to four communities. If you parse that even more and look at how many went to people of color, less than 5%. if you then become more magnanimous and throw in all women, the number only goes up to about 10% and that’s the kind of capital that seeds the growth of small business. And Lisa, been a real pleasure to get to know you and the great work that you do with LFN network. This is an industry and a cause whose time has come.
Mark Warner: (27:46)
We all know that COVID unfortunately hit communities of color and others have already mentioned this. What it really hit as well were black and brown businesses. It’s been reported in 2020, we lost 440,000 black owned businesses. Close to a third of Latino businesses had to close their doors for at least part of the time.
Mark Warner: (28:08)
And unfortunately, as the secretary acknowledged, and I think vice president acknowledged, when the government first started to set up its traditional relief programs, the PPP program, really well-intentioned. But after the first wave of money went out, we realized, gosh, black and brown businesses aren’t getting their fair share. Women owned businesses aren’t getting their fair share. Oftentimes, rural owned business weren’t getting their fair share. The reason was not a design flaw, but because we put most of this capital as the delivery mechanism through traditional banks.
Mark Warner: (28:40)
And particularly business of color, they didn’t have traditional banking relationships. They had bootstrapped up their businesses in the most classic American success story way. But then when it came time to say the federal government’s got resources for you, they didn’t have that long-term established banking relationship. So they got left out. In later rounds, we did a little better, but Senator Harris, Chairman Waters, Vice President Harris, we came together and said, we need to not just provide short-term relief.
Mark Warner: (29:10)
We need to start looking at structural relief in terms of access to cash. A lot more people get access to capital who look like me, then look like the balance of the speakers up here. And that’s just not fair. It’s just not right in a country that is majority women and about 35% people of color. We are not going to succeed in this country unless everyone has access to capital. So we came up with the Jobs and Neighborhood Investment Act. And as Chair Waters knows, and Senator Harris knows, it was a windy path to get here. People kept saying what’s that $12 billion for? Because candidly, a lot of folks outside the financial industry don’t understand what CDFIs do. They don’t understand that our MDIs have been decimated. So very quickly, the announcement today of the first round of grants, this programs been broken into two initiatives.
Mark Warner: (30:02)
$3 billion will go in direct grants to these organizations. The first $1.25 billion will go out with the secretary’s announcement. $1.75 billion will come out later in the year. And again, Chairs Waters out to get recognized to make sure that we did a little extra in there for black owned minority depository institutions. That’s really exciting. That’s about 10X what the government gives out in the CDIF fund on a normal basis. So substantial, but we’re the real game changer will come is there’s also $9 billion that will be distributed in a direct what’s called tier one capital into these institutions.
Mark Warner: (30:45)
That $9 billion on a traditional banking relationship can be leveraged 10 to one. That’ll mean $90 billion of additional lending to communities who are challenged. By definition, the CDFI has to lend at least 60% to low and moderate income communities. So this is first time in a long time, the federal government is literally putting its money where its mouth is in terms of support for minority businesses, women owned businesses, businesses that not had a fair shake.
Mark Warner: (31:16)
One of the things I’ve been working with the vice president on and folks with the treasury department on is I think this is a great first step, but this should not be enough. We need to challenge our major institutions. The [inaudible 00:31:27] banks, they have made a lot of press releases recently, but we need to make sure they actually put real capital up. We need to have a program similar to encourage community banks, to lend to women owned and minority owned businesses and rural on businesses. We need to make sure that corporate America at least has been talking about this, who say they want to do things to deal with racial inequity in this country, actually put real capital behind. We with the federal government have taken a giant step forward with this. It is due to the leadership of these incredible women behind me. I’m happy to be part of the team. And as I said, Maxine, anytime you need a wing man, sign me up. Thank you all so much.
Speaker 2: (32:03)
Speaker 3: (32:03)
That’s all we need.