Be thinking about what more you want to learn about? I'm not going to go through all the wonderful things on your resume but Mark was very gracious to come here. We could have done this via teleconference but he decided to come and we're grateful for that.

I'm excited to be here. I went away from the one other conference excited and stimulated. I want to cover a lot of issues from my perspective sitting in the middle of this change. My organization is going through a transformation in every part of it. One of the reasons I wanted to come here is to get away from it and think.

I have roots in Texas.

One of the comments Kirsten made this morning reminded me of this story. Many of you have heard about the Texa rancher that goes to Israel and visits a collective (a kibutz). The ranger says everything is big in Texas. The person in the kabutz says their land is really large too. The ranger says I can drive all day and not reach the end of my land. The kabutz person says, yea I had a car like that once.

I don't think that anything in our industry is at scale. I really want to thank Kirsten and Greg for bringing me into this. When Kirsten was at Equitable she funded my company's first conference. More recently she is a leading thinker and an innovator for the field. Today, being at the Fed, you were the first person from the Government speaking at our company and this year we have Chairman Bernanke speaking.

There was a long car ride and we had a conversation about scale and how you get there - Kirsten and I argued about this for hours. On one side was the argument that CDFIs need to go to the capital markets and the other side was capital markets need to move to the CDFIs. By 2001 we had looked up as a trade network and the set of assumptions we had were shifting. The first one is in policy. The CDFI fund allowed us to grow and the politics of that had changed by 2001. Economics - when we looked at the economy there were emerging markets (opportunity markets) and they lead to opening the doors to a number of things we are doing now. The growth in the market was going to be lead by ethnic markets. Non-caucasian growth will outstrip caucasian growth.

We asked two questions, are we relevant any more? We had been growing about 40% per year and we had stood on the shoulders of the CDC movement. Are we relevant to the world and where it is going? Can we sustain this? When we really thought about it we came to one conclusion - for all the good work we did (all the micro-entreprenuers, housing, businesses, etc.) we believed we were loosing the war. We felt that things in the macro-economic world, the economic disparities, etc. were getting worse.

We felt we had to respond and make structural and systemic changes. We focused on scale. We mean volume of financing (not assets) and we think that scale needs to be measured as a system. We thought that scale would be defined by different business relationships.

We developed a vision of where we are working towards a place where all citizens can work for the betterment of themselves and their communities. Our core purpose is to align capital with justice.

Excellence is a core value. The changes we are facing are long changes. We may not be there when these things are finished. The thing we wanted to do in the 10 years was to bring a CDC system to scale. We were focused on a system not on a membership network. We use the saying, mission before members, when there are conflicts.

We set 6 goals - create a high volume financing system. Take the offensive on policy. Broaden understanding for what we do. Develop relationships with mainstream players (having champions) and creating strong financial performance.

There is a revolution going on in our business. There is a tremendous amount of innovation going on. Calvert now has the ability to bring in capital from individuals. What the housing collaborative network is doing is really important. Geographic expansion is something very important for the near future.

• We created a CDFI assessment or rating system
• We wanted to do work in the area of policy
• We wanted to create a mortgage platform
• We wanted to do work in the area of brand

and all of these are things that are important because of the issues involved in them. Everyone of them have called into question everything we do every day.

CARS is targeted at loan funds. We look at two things - financial and performance risk and impact. There are other systems. Its really a system that tries to create transparency. The cost of finding transactions and the transaction costs were things that are important.

We started in 1997 and we put it on the shelf in 2001. We relaunched in 2003. We've rated 23 and we have 27 in the pipeline. We have subscribers that purchase the ratings and use them. Some banks build them into their policies. We know one instance where the CARS rating is in a covenant. Fundamentally it is about creating transparency and making money move. It has to bring old money and it has to bring new money. We hope that some smaller banks will use this to make decisions. The response has changed amongst CDFIs and amongst banks.

Issues - there is no money flow because of this. We wish there was some money and we hope there will be some soon. Who is the customer for this? The customer for this is the investor. That has lead us to some tension. The purpose of CARS is for the investor.

Who should pay? Who is getting the value out of it? This was easy to transition into. One thing we were about is performance. When we did that 30% of our membership quit because they didn't want to be about performance.

When we looked at policy we saw it as the dam problem. We've been defending programs for a long time and struggling over getting a piece of a trickle of funds. We need to have a policy objective at that level that has the institutional ego that says we are important.

When we talk about money from government it is considered subsidy and when you talk about money from government to business its called policy. The problem is we're not thinking agressively enough about this.

We're working on the 70% solution. We need to win the hearts and minds of the 70% of the population in the middle of the political spectrum. Talk about them in terms that they understand and don't turn them off.

We did a poll of 1000 people to see what they supported. 88% support access to health care for all Americans. 90% suggest that all Americans should own or have a home. Affordable housing is important. Opportunities or incentives for people to own their own businesses is important.

Opportunity finance for all Americans.

We create our own obstacles in some ways.

When you break this down - a living wage, affordable housing, etc. the strongly support out weighs the somewhat support.

We published a platform paper to capture some of the issues and frame this in different language. Every candidate for office we sent surveys to to see what they say about some of this stuff. There is a political moment here and we can be part of those answers.

Achieving scale model

If we focus on the Yellow we can take advantage of this moment. We have to think about policy on scalable solutions.

In 2008 we want to make opportunity finance something people talk about in the presidential campaign. This is a bi-partisan strategy. The is an issue of the opportunity finance industry. The White House is actually feeding us ideas. There is legislation to create an affordable housing fund.

The Mortgage Platform - we are not the only ones doing this. We don't want to be the only ones doing this. We want to break through. We have a distribution system in the CDFI system we work with. It is really good. That has great value in the sub-prime and prime areas. We have let the predatory lenders come in and steal wealth from the people we serve. We try to learn from other people's experience. We have tried to do something different and we're creating a holding company that will contract with the largest mortgage company. It will be an industry controlled system. It will give people the ability to control product development.

We have the ability to go to our capital market partners and develop new products. The lead product is a 105% mortgage and its got other elements to it. We have credit counseling built in. The first mortgage is sellable. How do we leverage it in some way to work in the markets we're working? It has to be profitable up and down the line. Its got to be profitable for the mortgage company and the second mortgage purchaser.

We think this is one version of the kind of collaborative model Kirsten has been talking about.

When you deal with capital market partners they don't understand this. We're trying to make decisions about how do some of this stuff.

The execution requires lead generation (marketing, marketing, marketing!). We need to get good at preaching what we practice. We need a different kind of compensation system.

Brand - we set out to make people understand us. We set out to say we needed to go through a branding exercise. We could have stayed National Community Capital. If we were serious about the transformation we needed the industry to take that seriously. We want to change the name of the organization and make a by-laws change. The meeting where we talked about this was the most widely attended and the vote for a name change passed with a 2 to 1 vote. Some people are really angry about that. We discovered in some market research, everyone not in the CDC industry, think community development is a bad thing. Every audience we talked to thinks things like government driven, corrupt and wasteful.

The things they liked are the opportunities we created. We asked what is your reaction to what we do they said they would be interested in investing (if they got a return near the top of fixed income). When asked the same questions using the words community development in it they said NO they wouldn't do it. The rate of the return they wanted if they would do it was the same plus 600 basis points.

Opportunity Finance has made a difference in who we can talk to. The small box used to be the CDC movement, CDFI as organization and the next yellow thing is what is next.

There is room for a new type of organization out there. We can create something that is profit maximizing. If I was really honest I think it will be really bumpy moving forward. I think there will be a creative revolution. People will get more annoyed at what we are trying to do. We will never have the funding to do the R&D that is required to do this. We have to learn to collaborate in ways we never have before.

The fact that Chairman Bernanke is coming to our conference is changing the way that people look at us.

We can start with some questions in the auditorium.

If anyone has any questions from the lunch presentation please ask them.

Q - NCCA changed its name last year. All the bankers still use community development. What is the plan to change the whole industry?

We didn't have the money to blow it out. We are working with members to give them tools and a language to use the new brand. Just get people to try it. We have a mulit-year strategy to get that to happen. Its going to take some time. Will the CDFI fund change their name? I don't know - that would take an act of law.

We have a new document that will try to capture the new message.

Q - you mentioned the mortgage platform

With the initial product we are starting with our members. We have about 50 that have expressed interest. The original product will be either brokering or originating and selling. The market values one platform for services. There is revenue attached to servicing but that is probably something that will come later. There will probably be three products:

• a Purchase product
• a Refinance product
• a Servicing product

We have a standard third party credit counseling default prevention but that is in addition to CDFIs. We hope that CDFIs will go out and talk to those people.