A Clinton-era gem to repolish
LITTLE ROCK — It’s a pity that the latest Democratic presidential debate coincided with a day-long conference at the Clinton presidential library — cohosted by Bill and Hillary Clinton — to talk about strategies to attack income inequality.
Every one of the candidates for 2020 — and a lot of mayors, governors and legislators — ought to make the trek to Arkansas to learn how Clinton rose from governor of an economically distressed state to preside over the greatest economic boom of the last half-century.
“This is a small state. If someone got laid off, there’s a 50% chance I knew them, practically,” Clinton told a packed auditorium of bankers, activists and exadministration officials. He recalled how the need to revitalize the state in the 1980s led him — along with the state’s First Lady, Hillary Clinton — to partner with local business and charitable leaders to co-found Southern Bancorp, a community development bank that provides loans and other services to distressed areas.
“We started hearing from businesses that they no longer knew their banker,”
Hillary said, recounting the dire need for credit in Northeastern Arkansas. “More dreams die in the parking lots of banks than anywhere else in America.”
From humble beginnings, Southern Bancorp has grown to $1.2 billion in assets with more than 43 branches across the mid-South. Last year, the bank extended 7,000 loans, half of them for less than $10,000.
Each of those loans has a story behind it. Credit allows a small business to keep its doors open, or a day-care center to expand or repair a leaky roof; loans for families can send a child to college or stave off foreclosure.
After Clinton was elected president in 1992, his formative experiences in Arkansas became the basis of a littleknown piece of legislation, the Community Development Financial Institutions Act of 1994, that provides seed capital and other assistance to a national network of community-based banks, loan funds, credit unions and microcredit programs.
At the time, I was working full-time as an advocate pushing for the legislation. My boss at the time, Cliff Rosenthal, was (and remains) a tireless organizer and visionary who got me to spend countless hours drafting memos, opeds and testimony for Congress and sitting in strategy sessions.
I will never forget sitting in the Rose Garden of the White House in July 1993, watching Clinton announce plans to get the CDFI Fund up and running — a promise that he kept by signing the legislation a year later.
The law led to the certification of more than 1,000 community-based institutions that operate in all 50 states, with more than $180 billion in assets. Companion legislation led to the creation of empowerment zones and New Market Tax Credits that provide additional credit to loan funds and businesses that need them.
That close attention to small business and family-level economic development is part of why 22.9 million jobs were created during the Clinton years
— the most under any single administration — along with seven straight years of income growth and recordhigh homeownership.
A quarter-century later, the president remains a true believer in grassroots financial institutions.
“What helps Brooklyn also helps Appalachia,” he told me, arguing that getting back to economic basics can help heal America’s cultural divisions.
“People ask me all the time: ‘Well, there’s all this division. Is this economics or culture or race or whatever?’ And the truth is, it’s everything,” he said. “Once you uproot people and they feel economically insecure, socially looked down on and personally disempowered, it really doesn’t matter what the first feeling they had was. You know what I mean? You’ve got to fix it.”
This year’s crop of candidates for president should learn from the Clinton experience and give themselves a crash course in how loan funds, credit unions and micro-lenders can help revive the economy in troubled areas. Sound economics, it turns out, is also good politics.
Louis is political anchor of NY1 News.