Magazine article American Banker

LaFalce Offers Legislation to Reward Investments in Low-Income Neighborhoods

Magazine article American Banker

LaFalce Offers Legislation to Reward Investments in Low-Income Neighborhoods

Article excerpt

WASHINGTON -

To get the ball rolling on President Clinton's New Markets initiative, Rep. John J. LaFalce, D-N.Y., introduced legislation last week that would guarantee bonds issued by companies investing and lending in poor areas.

Under Rep. LaFalce's plan, the Department of Housing and Urban Development would guarantee debt issued by for-profit community development companies that invest in businesses located in low-income areas. The bill would require these businesses to generate half their gross income in communities where 20% of the people are living in poverty.

HUD would license the investors as "America's Private Investment Companies.'' These companies, which could be owned by banks, would have to have $25 million of equity capital and would have to be devoted to providing investment capital to low-income communities or low-income people.

"This legislation offers a practical plan that harnesses the financial muscle of the private sector to invest in communities that have been left behind,'' Rep. LaFalce said in a statement last week.

President Clinton's New Markets initiative was unveiled in early July and is designed to encourage corporate investments in domestic low-income areas rather than emerging markets overseas.

For instance, the President has called for a tax credit of 25% for corporations that invest in poor communities.

The proposed HUD program would mirror the Small Business Administration, yet be more directly helpful to lower-income areas, a community advocate said. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.