Thank you. Good morning. First, Gene Sperling, thank you for the kind introduction. What Gene doesn't tell you is that nobody else offered me any other job (Laughter), until Gene got to Washington and told me to come down and we'll talk about HUD. That's why I was there so long.

But it is an inspiration to have the National Economic Advisor to the President of the United States talking about these issues at this forum. It's a statement, frankly, about the President who cares about these issues. But it's also a statement about the President's Economic Advisor. That he's here, he believes, and he spends as much time as he does, in making sure this economy works for everyone, is a testament to him, Gene Sperling. (Applause)

I'm here with many of my colleagues, Secretary Rodney Slater, it's a pleasure to be him. Franklin Raines, head of Fannie Mae, who I have the pleasure of working with. Chairman Rangel, Chairman Rangel. Now let me tell you something about Chairman Rangel. I worked with him in New York for more years than I care to remember. Working with Charlie in New York, I knew Charlie was good, as you know Charlie is good. When you get to Washington and you see Charlie operate within the Congress of the United States and you see what he does, he looks even better. Charles Rangel delivers not just for this District, not just for New York City, not just for New York State, he is a champion for the nation on these issues. No one does what Chairman Rangel does. (Applause).

Thank you also Rev. Jesse Jackson for thinking of this forum, which is a brilliant idea, and then for making it happen. You need a good idea and you need the ability to make it happen, and that's what Jesse Jackson did. I can't tell you how important it is, because one of the first things we have to do if we're going to solve this problem, is we get it up on the radar screen of the American people.

We've gotten so good at talking about this economy and the Dow Jones and the success of the economy, that it is not common knowledge, it is not intuitive, that there are places left behind. And that with all this great economic strength we have further to go. We have to get that on the radar screen of the American people, and that's what this conference has done so successfully.

That's what President Clinton was trying to get at when he went across the nation and said, come with me, let me show you the Mississippi Delta, and let me show you the Indian Reservations, and let me show you Newark, how much further we have to go. That is the inspiration of this conference, and God bless Jesse Jackson for doing it. (Applause).

Let me make a couple of quick points, if I can. First, this is a great economic time, a great economic success story. It is historic, every number is better than anyone could have imagined. But at the same time the deepest economic wisdom would say, let's take this strength and make sure we now invest in the places that have been left behind.

If you're running a corporation, and you have one subsidiary, or two subsidiaries that are doing amazingly well and have raised the bottom line for the whole corporation, you would celebrate the dividends, but you also say, let's take that dividend and go back and invest in those subsidiaries that are not doing as well, so the entire corporation will do better. Let's take that dividend and invest in the broadest, deepest economic expense.

That's what we want to do now. There are subdivisions, there are subsidiaries in this great corporation, the United States, that are not doing as well as others. Yes, we have great economic success, but let's be honest, and let's be frank, you also have great income inequality. You also have the middle class working very hard. You also have a problem of poverty. You also have the older geographic areas in this nation, of cities, struggling to keep off with the newer areas. And that is an opportunity, it's not a problem, it is an opportunity. Because now we have that dividend, we have the foresight, we have the vision, we can invest in those areas, bring them up, they can be stronger next year.

This state is a microcosm for this challenge and this opportunity. The Empire State, New York, is also the state of the greatest income inequality in the nation, New York State. The top five percent have done better than ever before, but the middle and bottom 60 percent are down two percent in real wages. Poverty in New York City, believe it or not, is 23 percent, as high it was in the sixties. Child poverty is 40 percent, double the national average.

So you cannot hear those numbers and say we are an unmitigated success. You can simply have done very well, but you also simultaneously must say, look how much further we have to go. Wall Street has two percent of the state's employment, but one-third of the state's growth. New York City is doing extremely well, but upstate New York is 49th out of 50 in state figures in job growth. So you see both the amazing strength and you see the amazing opportunity.

We know what needs to be done - you were given the numbers from the panel, the different elements. Mr. Sperling went through them, and the Reverend outlined them. We need an education system that works for everyone. If you don't have the skills you will not compete, you can be left behind in the first grade and second grade in this education system and never catch up. The information superhighway, everyone talks about how fast it can take us into the future, and it can. But if you're not on that information superhighway you can get left behind just as fast, and you'll never catch up. Education, job training, re-training, adult learning, lifetime education.

Homeownership. With the CRA, it's been a phenomenal tool in helping us provide the opportunity of homeownership which is also economic development. The first business loan is the equity the person has in their home. It is the best community development, the best for personal development, and the best economic development.

You'll hear from Frank Raines at Fannie Mae. We recently announced an agreement with Fannie Mae that 50 percent of their loans, 50 percent of their loans, will go to low or moderate income people. We are working with Freddie Mac, which is the second housing GSE on that agreement. I believe we'll get it. If we get that agreement, 50 percent of Fannie and Freddie Mae's portfolio will go into affordable housing - that will be $2.4 trillion dollars in mortgages, $2.4 trillion in mortgages over 10 years.

Thanks to President Clinton we have the best HUD budget in over a decade. And we have the New Markets agenda to do what I think is the most important piece, which is stimulating economic growth in the places left behind.

Now the market believes there is a competitive disadvantage for these places or people in these places, the older cities, rural America. That they are at a competitive disadvantage. I'll get to this in a minute, but it is a perceived disadvantage. I don't believe the market is correct, I think it is a perceived disadvantage. Meaning that it is harder to develop a brownfield in Newark than it is to develop a green field in a suburban community. That all things being equal, it's easier for a business to go into a suburban area than it is to go back into an urban area. Unless there is some subsidy that changes the equation.

That's what the New Markets agenda is all about, that's what the Empowerment Zone initiative is all about, that's what Vice President Gore has been working on for seven years. How do you change the economic calculation to make those areas perceived to be a competitive disadvantage competitive once again.

And there are a number of ways you can do that. You can use the tax code, which is what Gene was talking about with the new markets tax credit, the Empowerment Zone tax credit. You can go for a low interest loan which we've been doing at HUD. You can go for cash grants. There are a number of ways to subsidize the difference, equity capital, but you have to subsidize the difference. You have to add a number to the equation to bring businesses into those areas. And you need to add a number to the equation to make the existing businesses competitive. They need access to capital, they need mentoring, they may need technical assistance, and that is a role for government, and an element to bring the private market to a place that it would not otherwise go. That's what the New Markets agenda is all about, and it is exactly right.

Now I say a perceived disadvantage. I believe the private market often makes a mistake and doesn't see the advantage that is in these areas. They are not the areas they normally do business in, they are not typical areas. Many of the people who would be doing business are not the typical customer. And I think the unorthodox nature of the people or the place often fools the private sector companies. Why do I say that? Because that's what the experience of HUD teaches us.

Listen to this. HUD has a subsidiary called FHA, the Federal Housing Administration. It basically makes mortgages, insures mortgages that the private sector won't make. You go to a bank and you try to get a mortgage and you don't qualify. As a last resort you can go to the FHA and try to get mortgage insurance. Last year FHA made $1.5 billion on the mortgages that no private sector company wanted to make. Why? Some of our borrowers have spotty credit histories. It doesn't make them a bad risk, just means they have a spotty credit history the way we have come to define that term. Fifty percent of the African Americans who buy a home buy it through the FHA. $1.5 billion serving people and places the market didn't want to go.

On this New Markets agenda, over the past six years, HUD has done $3.5 billion dollars in economic development lending where private sector companies didn't want to go, large scale economic projects, shopping malls, retrofit of industrial areas, $3.5 billion. Hundreds of projects all across the United States, that's our portfolio. They have a default rate of less than six percent - on loans the market didn't want to make. So we're making money on the very loans we're talking about without a subsidy, without the New Markets tax credit, without the Empowerment Zone, without an EDI grant, and we're making money. So there is money to be made.

My last point is this. This effort is not about charity, we're not asking for a hand out for these places and the people who live there. We're not even asking for a hand up. We're saying it's in your best interest America. There is money to be made in these places, you need them as much as they need you. There is money to be made, that's what FHA shows. That's what the HUD economic development experience shows.

Go to 125th Street in Harlem and see how the businesses are doing there. Ask them, did you think this was a risk when you came in, and they said, yes, Harlem, we were a little anxious about the business environment, and now we've done better than ever before, and they'll tell you the same thing in the Atlanta Empowerment Zone, and they will tell you the same thing in Kentucky Highlands.

There is money to be made. It's not charity because for the national economy to continue to prosper - the essential ingredients, the air and water of the national economy is a consumer market and manpower. You know where the new work force is, the work force of tomorrow are the unemployed of today - it's in these very areas. The untapped market is in these very areas. The national economy needs these places as much as these places need the national economy, and we need it as a nation. We need to stay strong as a society, as a community.

Jesse Jackson says, keep hope alive, why? Because hope without opportunity is a first step to anarchy. When a person doesn't believe that the American Dream works for them, when they believe the American dream is a myth, that they can't make it, that there is no place for them to go, they are never going to make it out of the neighborhood, then we have a dangerous situation. Keep hope alive because that's the only way the country stays strong. It's not charity, because if you think this is a strong economy, boy you haven't seen anything yet. Imagine what we can do with that Dow Jones, imagine what we can do with this nation.

When we use all our talents, and when we use all our assets, and those millions of unemployed are working for us, and we fully use our women, and we fully use our young people, and the oldest cities, and the Gary, Indianas and the Albanys, and the Buffalos, and the Rochesters are all working for us, imagine how strong we can be. You think this is good, it's nothing compared to what we can be when we invest in all our people and all our places. That's why "new markets" is the American new market and the American community. God bless you. (Applause)