June 12, 2014

CFO Magazine features Venable client alert on SIGTARP’s targeting of credit unions

1 min

On June 10, 2014, CFO Magazine quoted a Venable client alert on the Special Inspector General for TARP (SIGTARP) targeting of small banks and credit union which received funding under the Community Development Capital Initiative (CDCI) during the financial crisis. The alert, “Credit Unions Beware – the TARP Watchdog Is Ready to Pounce,” was written by Venable partner Mike Rivera and associate Joanna Breslow Boyd in June 2014.

According to Rivera and Boyd’s alert, CDCI was designed to “support small-business lending in the ‘hardest hit’ rural and urban areas by making low-cost capital available.” So far, only 8 of 48 credit unions have repaid their portion of the $570 million invested in them by the Treasury Department. SIGTARP said it expects many credit unions to remain in CDCI for a several more years. Rivera and Boyd said, “credit unions continue to face economic challenges that impair their financial stability and ability to repay TARP.”

In order to receive CDCI money, recipients had to be designated community development financial institutions meaning 60% of their loans had to be made to underserved communities. Many of them, according to Rivera and Boyd, “serve the most economically harmed areas around the country that continue to struggle to recover from the financial crisis.”