Night after night last winter, Frank Altman sat in his pajamas, reading legal documents on his laptop. Altman's Minneapolis-based nonprofit, Community Reinvestment Fund, was in the midst of offering $82.5 million in tax-credit investments to Bear Stearns, the nation's seventh-largest securities firm. The proceeds would finance small businesses in low-income areas all over the country. It wasn't just the sum involved that made it such a big deal. To pull it off, Altman had had to lobby Congress to create a tax credit for organizations like his, and then he had to persuade Bear to come onboard. Somehow, it all came together.

Altman first came upon the idea of creating a financial market for community groups in the 1980s, when he worked at the Minnesota Department of Energy and Economic Development. At the time, thousands of people were losing mining and timber jobs in the northeastern part of the state, yet community groups could do little to help. Federal financing had simply dried up.

Altman had a novel idea for reviving these organizations: He wanted community development groups to make loans to small-business owners, which he would bundle and then sell to investors, much the way Fannie Mae does in the residential mortgage market. The goal would be to pool enough loans to offer asset-backed securities to banks and insurance companies, which would ultimately free up cash for small-time lenders, who could then make new and larger loans to local businesses.

At first it was tough to convince community groups -- much less investors -- that the system would work. So Altman drove around Minnesota, past boarded-up homes and dilapidated farms, to tiny burgs like Crookston and Buffalo. He eventually convinced five cities themselves to sell their loans, which were purchased by regional banks and insurers for around $2.5 million.

Using that deal as a model, Altman persuaded more people to try out the system, and the deals grew larger and more sophisticated. Eventually, CRF worked with community groups from Harlem to East Los Angeles. In 2000, Altman and others successfully lobbied Congress to create a tax credit that encouraged private investment in low-income communities. By 2003, he had managed to get the government to allocate $162.5 million to CRF under the tax credit. That piqued Bear Stearns' interest, and cleared the way for the landmark deal that was completed in March. Piggybacking on that success, Altman organized two deals, worth a combined $130.8 million, that bundled loans not backed by tax-credit dollars. Significant portions of both deals were rated AAA by Standard & Poor's.

Today, Altman is busy courting new investors, and he's looking to expand and refine his market system until it is as familiar to mainstream financiers as the secondary mort- gage market. "My plan is for this system to be a sustainable resource, part of the social capital of the United States," says Altman. "The goal is to see that it has a transformative role in public finance."

Those who know him do not doubt that he'll achieve that goal. "The fact that it took him however many years to open our eyes is a mark of his character," says John Kinghorn, a Prudential Financial vice president who has invested close to $40 million in CRF. "We're the ones," Kinghorn adds, "that should have opened our eyes sooner."