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II. New Economy -
While America's great cities
and distressed rural communities fell into disrepair in the 1980s, Washington ignored their fate.
Private enterprise has abandoned these distressed areas, leaving young people with few job
prospects and declining hopes.The Clinton Administration has launched initiatives that promote
economic opportunity in distressed communities.
The President's initiative, passed by Congress, includes $2.5 billion in tax
incentives and $1.3billion in flexible grants to spur local communities to address barriers to
economic growth.Over 500 communities across America took up the EZ challenge, submitting strategic
plans for revitalizing their communities.
The private/public partnerships that have developed as a result of the EZ/EC application
process will be a force for change far into the future. In Detroit, for example, more than $2
billion in private-sector commitments have been pledged.
The CDBFI Act creates a network of community development banks and financial institutions.
Their primary mission is to lend, invest, and provide basic banking services in low- and moderate-income
communities. This initiative will encourage the private sector to work in places it has not gone
When fully leveraged with private capital, the CDBFI program will create nearly $5 billion in
new investments in low and moderate income communities.
The initiative will provide as many as 40,000 loans to entrepreneurs, expanding businesses,
homeowners, and others who might not otherwise be able to obtain credit.
Community Reinvestment Act
The President issued a directive to reform CRA, the 1977 law to prevent bank redlining.
Under the new regulations, banks will be judged on performance -- actual lending, investments, and
basic banking services -- rather than paperwork. Reform will unleash billions in new credit to
low- and moderate income communities.
To reduce unnecessary regulatory burdens, a streamlined examination process applies to about
80% of all banks and S&Ls.
The Administration permanently extended the Low-Income Housing Tax Credit and the Mortgage
Revenue Bond program to encourage private investors to build affordable housing and to help first-time
Up to 15 new SBA One-Stop Capital Shops will distribute $3 billion in loans and investment for small and minority business over the next five years.
Capital Gains Rollover and Exclusion -- To encourage capital investment in small and minority-owned business, the President signed legislation to provide capital gains tax relief for investments in certain venture capital companies.
As President Clinton said, [There] needs to be a new partnership between Washington and the communities and the individuals of this country, and there needs to be a way of doing business in which we try to create the conditions in which people can seize opportunities for themselves. The Clinton Administration's community empowerment strategy is helping restore the American Dream in distressed areas by focusing on helping people help themselves.