We on the Community Affairs staff regularly meet with
community development professionals, attend seminars, and otherwise
participate in community development activities. Frequently, other
participants ask why we are there. Specifically, they want to know
the interests the Federal Reserve Bank of Minneapolis has in community
development and what the Reserve Bank does to further community
In this article, we will answer these questions. Because you are
our partners in community development, we want you to understand
that the Federal Reserve System and its twelve Reserve Banks have
a stated commitment to community development.
We also want you to understand the unique position of the Federal
Reserve Bank in community development. First, we have a voice outside
that of the banks, community organizations or developers. We can
bring these active participants together to help find solutions
to community development issues. Furthermore, we have specialized
knowledge of and offer educational programs on the Community Reinvestment
Act (CRA), Home Mortgage Disclosure Act (HMDA) and fair lending
regulations. And while the Community Affairs and examination functions
at each Reserve Bank are separate, they often work together on training
and other educational efforts.
Why the Fed is involved in community development
The economic vitality of individual communities ultimately affects
the health of our overall economy, and a community's economic vitality
depends on people's access to credit to build businesses and purchase
Thus, the Community Affairs function at the Reserve Banks consists
of helping every participantbe it an individual or a communitygain
equal access to the credit markets and to the information necessary
to participate in those markets. Since lower-income individuals
and communities are most in need of such help, the Reserve Banks
concentrate their efforts on those participants.
As early as 1981, the Board of Governors of the Federal Reserve
System recognized the need for community reinvestment education.
Fifteen years later, Community Affairs fulfills the System's mission
of supporting community development activities and promoting fair
and equal access to credit. To that end, Community Affairs:
- encourages partnerships among public and private organizations
to help deliver credit to low- and moderate-income individuals
- informs financial institutions and community organizations about
the availability of public and private development resources;
- promotes understanding of the rights and responsibilities of
individuals, communities and financial institutions regarding
CRA and HMDA; and
- provides information to increase understanding of community
needs for affordable housing and small business development.
Notice that the Fed does not participate directly in specific projects.
We neither make loans nor provide grants to organizations or programs.
We leave direct participation to governmental agencies such as the
Department of Housing and Urban Development and the Small Business
Administration, which are chartered for this purpose.
What we do in our District
Within the overall mission of supporting community development
and promoting fair and equal access to credit, each of the twelve
Reserve Banks sets its own community development program based on
In the Ninth District, we have one large metropolitan area, approximately
50 Indian reservations and a geographically large area of smaller
cities, towns and rural areas. Just as the demographics vary across
the District, so do the development issues facing our communities.
Some communities have a need for additional affordable housing that
is so acute it impedes job-creation efforts. Other communities have
housing that needs renovation and residents who need jobs close
to home. Finally, some communities' most urgent need is job creation.
The need for community development assistance varies greatly across
the Ninth District. For example, some communities have many active
community development participants while others are trying to mobilize
Thus, we have divided our Community Affairs program into three
sectors: small cities/rural areas, Indian country and the Twin Cities
metropolitan area. We based these sectors on the geography and demographics
of the District, the types of issues facing each sector and the
need for community development assistance.
Small cities/rural areas
Small cities and rural areas comprise the largest part of our district.
About 60 percent of the Ninth District population lives in these
areas. Often, the most pressing development need is for affordable
housing. The need for community development assistance in these
communities varies. Banks and others in the community also look
to us and the other banking regulators for training and education
on CRA and fair lending.
During 1995 and 1996, we sponsored four training sessions on CRA
aimed at community representatives and bankers and participated
in four sessions aimed just at bankers.
To address affordable housing needs, we met numerous times with
public and private community members to seek understanding of and
solutions to affordable housing issues in the small cities and rural
areas in our District. We also participated in meetings of rural
housing partnerships in two states, South Dakota and Minnesota.
Lastly, along with representatives from state and federal public
agencies and private organizations, we helped plan an Affordable
Homes Congress in Brainerd, Minn., in October 1996. The goal of
this seminal event was to seek solutions to single-family affordable
housing problems. The congress provided a venue for discussion of
successful partnership arrangements and new and creative public
and private affordable housing initiatives.
The collective population of the approximately 50 Indian reservations
in the Ninth District represents about 2 percent of the District's
population. Most of the reservations face chronic and severe development
issues. Some reservations have unemployment rates as high as 50
percent to 80 percent, and much of the housing is substandard.
Our efforts in Indian Country involve helping to establish the
conditions necessary for community development to occur. For example,
over the past two years, we:
- sponsored seminars and produced a five-part video series to
educate bankers and others about the cultural and legal aspects
of lending in Indian Country;
- began participating with tribal governments and legal experts
to help certain tribal governments develop the legal structure
necessary for lending on reservations; and
- began a long-range project on one reservation in South Dakota
to assemble lenders, tribal officials and other tribal leaders,
state and federal government agency personnel, and others interested
in community development to find mutually satisfying solutions
for the reservation's development challenges.
Twin Cities metropolitan area
Two and a half million people live in Minnesota's Twin Cities metropolitan
area; this figure represents about 35 percent of the Ninth District's
population. Many community groups, nonprofit corporations, financial
institutions and others work to advance development in the Twin
Thus, our efforts in this metropolitan area involve fostering
communication and partnerships. For example, in June we sponsored
a community development financing exposition. About 200 representatives
from governmental agencies, technical assistance providers, community
groups and financial institutions from the metropolitan area attended
a full day of workshops, roundtables and information booths.
What else do we do
In addition to these programs, we educate and encourage partnerships
throughout the District via our publications. For example, Community
Dividendis circulated to more than 5,000 District community
development professionals. Our state housing finance guide, published
earlier this year, was so well received that we are preparing a
companion publication on state economic development finance programs.
We attempt to advance the development of our communities through
the efforts discussed here and many more. But we do not work toward
this goal alone. You, the development professionals in our communities,
clearly understand the need for education, training, technical assistance
and facilitation. In an effort to solve the problems that face our
communities, we offer our time and talents in partnership with you.
As we continue our community development efforts throughout the
District, we trust you will recognize us and appreciate our role.
Call us if we can help. It is why we are here.
For more information or to obtain a brochure written by the
Federal Reserve Bank of Richmond on the Community Affairs
function, contact the Community Affairs office of the Federal
Reserve Bank of Minneapolis at (612) 204-5074.