White House efforts to cut spending on a low-income lending program, the Community Development Financial Institutions Fund (CDFI Fund), are reportedly encountering opposition.
Bankers, industry executives, lawmakers and Treasury Secretary Scott Bessent have expressed support for preserving the CDFI, though Bessent said the Treasury Department will review the program, Bloomberg reported Thursday (March 20).
The CDFI Fund gave $6.3 billion of awards, tax credits and guarantees last year, while supporting the supply of capital to about nine million people, according to the report.
An executive order issued by the White House Friday (March 14) included the CDFI Fund among government entities that it said should reduce their presence and function to the minimum required by law, per the report.
Bankers and industry executives quickly began lobbying lawmakers and Treasury officials, arguing that the program is required by Congressional statute, the report said.
Sens. Mark Warner, D-Va., and Mike Crapo, R-Idaho, issued a letter Sunday (March 16) supporting the fund.
Bessent issued a statement Monday (March 17) saying that CDFIs are important for supporting Main Street but that the Treasury Department will meet the requirements of the executive order by submitting a response to the Office of Management and Budget that explains which parts of the program are statutorily required, per the report.
Friday’s executive order issued by the White House included the CDFI Fund along with six other governmental agencies and required them to submit their reports to the Office of Management and Budget within seven days of the order.
“This order continues the reduction in the elements of the Federal bureaucracy that the President has determined are unnecessary,” the order said.
The executive order has implications beyond the federal grant program, PYMNTS CEO Karen Webster and QED Investors Partner Amias Gerety said Monday during their “Washington Weekly” discussion.
As of January, 495 certified CDFI credit unions serve millions of members in economically distressed areas, and these institutions now face considerable uncertainty regarding funding streams and operational support.
Gerety said that nearly 10% of U.S. credit unions leverage the fund’s grants, subsidies and affordable housing loans to serve low-income and minority communities.
