Under the CDCI program, the Treasury took original TARP funds that had been distributed to banks and repaid and provided them to community development banks and credit unions. But unlike the original TARP program, Treasury targeted the healthiest community development institutions as recipients for the CDCI funds. CDCUs and banks that could use the supplemental capital had to prove their financial health to their regulator and be recognized as community development financial institutions by the Treasury's CDFI Fund.

“It's a common misconception that TARP funds only went to large Wall Street firms, but the CDCI program is yet another example of how TARP is providing critical assistance to Main Street financial institutions,” said Herbert Allison, Treasury Assistant Secretary for Financial Stability. “CDCI funding is helping to strengthen local financial institutions and deliver credit to small businesses and families.”

“Community development financial institutions have been at the forefront of the efforts to fight the economic recession in our nation's low-income communities,” said Donna J. Gambrell, director the CDFI fund. “At a time when many financial institutions have pulled back, CDFIs have actually increased their lending and investments in underserved communities. These CDCI investments will enable community banks, thrifts and credit unions to spur economic development in the communities that have been hit hardest by the economic downturn.”

But Rosenthal acknowledged that while the distribution represented a triumph for CDCUs, the moment was slightly bittersweet because relatively few credit unions persevered through the entire application process until they received the funds.

Rosenthal and other sources attributed the low number to several different factors, including a complicated and conservative application process and the trouble some CUs had with the terms of the CDCI loans.

“The initial application to NCUA was very short, almost deceptively so,” said Rosenthal, “For the second step, the CUs had to submit secondary capital plans and that was somewhat complicated.”

Neither the NCUA nor the Treasury has released the final numbers, but the federation believes that 111 credit unions completed applications to the point of filling out secondary capital plans and that the agency had recommended 85 CUs to the CDFI Fund as viable candidates for the money. Of that number, the federation believes roughly 60 were awarded funds and then the 48 were able to receive them.

Rosenthal attributed the final problems some credit unions had accepting the funds to a number of different issues.

Even after a credit union received a loan, Rosenthal explained, there were still obstacles. Because the loans were funded with TARP money, many different regulations remained in place for the CDCI program, none of which were crafted with credit unions in mind. For example, rules that were intended, at the big banks, to limit the bonuses of the top executives wound up limiting even the most modest merit pay or bonus programs for all a credit union's employees when applied to CDCUs.

“We pushed back hard on some of these, but Treasury was adamant. These were in the statute and could not be changed and some credit unions could not do them,” Rosenthal said.

He recounted one requirement which led to every employee and volunteer at a credit union, from the board chairman to the part-time tellers, having to sign a pledge and share a great deal of personal information, and the CU's loan fell through when not all the employees would do it.

Finally, because the loans are issued in New York and are considered securities there, the CDCUs that received them had to make sure that nothing in their operations conflicted with New York law and had to hire a New York lawyer to do it. This would have been far too expensive for many of the smaller CDCUs, but the National Federation got some help in the form of pro-bono legal services from lawyers affiliated with the Lawyers Alliance for New York, which has lawyers qualified in states across the country.

–[email protected]

The 48 CDCI-Awarded CUs

The following are the credit unions that received money from the CDCI program, their locations and the amounts of money they received.

• - Alternatives FCU, Ithaca, N.Y., $2.23 million
  – Atlantic City FCU, Lander, Wyo., $2.50 million
  – Bethex FCU, Bronx, N.Y., $502,000
  – Border FCU, Del R?o, Texas, $3.26 million
  – Brewery CU, Milwaukee, Wis., $1.10 million
  – Brooklyn Cooperative FCU, Brooklyn, N.Y., $300,000
  – Buffalo Cooperative FCU, Buffalo, N.Y., $145,000
  – Butte FCU, Biggs, Calif., $1.00 million
  – Carter FCU, Springhill, La., $6.30 million
  – Community First Guam FCU, Hagatna, Guam, $2.65 million
  – Community Plus FCU, Rantoul, Ill., $450,000
  – Cooperative Center FCU, Berkeley, Calif., $2.80 million
  – DC FCU, Washington D.C., $1.52 million
  – East End Baptist Tabernacle FCU, Bridgeport, Conn., $7,000
  – Episcopal Community FCU, Los Angeles, Calif., $100,000
  – Fairfax County FCU, Fairfax, Va., $8.04 million
  – Faith Based FCU, Oceanside, Calif., $30,000
  – Fidelis FCU, New York, N.Y., $14,000
  – First Legacy Community CU, Charlotte, N.C., $1.00 million
  – Freedom First FCU, Salem, Va., $9.28 million
  – Gateway Community FCU, Missoula, Mont., $1.66 million
  – Genesee Co-op FCU, Rochester, N.Y., $300,000
  – Greater Kinston CU, Kinston, N.C., $350,000
  – Hill District FCU, Pittsburgh, Pa., $100,000
  – Hope Community CU, Jackson, Miss., $4.52 million
  – Independent Employees Group FCU, Hilo, Hawaii, $698,000
  – Liberty County Teachers FCU, Liberty, Texas, $435,000
  – Lower East Side People's FCU, New York, N.Y., $898,000
  – Neighborhood Trust FCU, New York, N.Y., $283,000
  – Northeast Community FCU, San Francisco, Calif., $350,000
  – North Side Community FCU, Chicago, Ill., $325,000
  – Opportunities CU, Burlington, Vt., $1.09 million
  – Phenix Pride FCU, Phenix City, Ala., $153,000
  – Prince Kuhio FCU, Honolulu, Hawaii, $273,000
  – Pyramid FCU, Tucson, Ariz., $2.50 million
  – Renaissance Community Development CU, ? Somerset, N.J., $31,000
  – Santa Cruz Community CU, Santa Cruz, Calif., $2.83 million
  – Shreveport FCU, Shreveport, La., $2.65 million
  – Southern Chautauqua FCU, Lakewood, N.Y., $1.71 million
  – South Side CU, San Antonio, Texas, $1.10 million
  – Thurston Union of Low Income People CU, ? Olympia, Wash., $75,000
  – Tongass FCU, Ketchikan, Alaska, $1.6 million
  – Tulane-Loyola FCU, New Orleans, La., $424,000
  – Union Baptist Church FCU, Fort Wayne, Ind., $10,000
  – Union Settlement FCU, New York, N.Y., $295,000
  – UNO FCU, New Orleans, La., $743,000
  – Vigo County FCU, Terre Haute, Ind., $1.23 million
  – Workers United FCU, New York, N.Y., $57,000