CDFI Means Michelle Alexander Is Wrong About The Clinton Presidency
In The Nation, Michelle Alexander talks about how the Clintons were worse than Ronald Reagan for black people. The Clintons worked extremely hard to improve outcomes for black people, and Alexander’s claims are absolutely absurd. Though there were criminal justice policies that were definitely detrimental to poor communities and communities of color with the benefit of 25 years of hindsight, there were many economic policies, including CDFI, that had a positive impact on them that actually undid a lot of the economic damage the Reagan Administration inflicted upon them.
Community Reinvestment Act Deluxe
Unsurprisingly, and very similar to today, discriminatory lending practices persisted in the late 80’s and 90’s despite the Community Reinvestment Act of 1977 (CRA). It turns out the same magazine that presented Alexander’s treatise recognized Reagan wasn’t too keen on community reinvestment or really anything improving life for the poor or people of color. Clinton signed legislation revising CRA regulations, placing more emphasis on a bank’s lending and investment performance instead of its marketing and outreach efforts. The heightened federal attention to the CRA forced banks to comply with the law’s provisions, and was a major cause of the substantial growth in bank lending in low-income markets in the 1990s.
Community Development Finance Institutions (CDFI)
When Clinton was governor of Arkansas, he helped start Southern Bancorp, which today is one of the only institutions doing successful and sustainable community development lending in rural Arkansas. Running for President, one of his proposals was the establishment of 100 similar development banks throughout the country. While existing institutions pushed back, including those who benefitted from Reagan/Bush era policies exacerbating the problem, as President, Clinton was able to sign the Community Development and Regulatory Improvement Act of 1994 authorizing the creation of a fund for Community Development Financial Institutions (CDFI) helping poor communities and communities of color.
The Fund has been instrumental to the development of creative lending, grantmaking, and technical assistance in poor communities and communities of color for housing, social service organizations, small businesses, the arts, healthy food access and the like. While you’ll find CDFIs and related institutions lending to and empowering organizations run by and serving poor communities and communities of color, they are not the answer to solving income inequality.
In every city and rural area across the country, you can find CDFIs doing the real work to promote and inspire change by infusing sustainable, “friendly” capital into organizations that have been traditionally denied access to it. Killing The Breeze is a minority owned business and publication, operating out of Brooklyn, banking at a CDFI. We support and appreciate this system of lending institutions and thank the Clinton administration for focusing on economic development in all communities for the long term benefit of all people. I love Michelle Alexander’s work, but when it comes to the policies of the Clinton Administration being worse than Reagan’s, she doesn’t know what she’s talking about.