Trump Administration's Push To Cut CDFI Funding Faces Bipartisan Backlash as Rural Homebuyers Risk Losing Critical Support
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The Trump administration recently made a decision that could have negative consequences for a large segment of homebuyers traditionally not reached by big banks.
President Donald Trump issued an executive order on March 14 to cut funding for the Community Development Financial Institutions Fund.
Per the executive order, the multi-billion dollar program will see 'personnel' and 'function' cuts, reducing them to only what's legally necessary.
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CDFI, which was launched 1994, provides funds to rural areas underserved by big banks. These communities are traditionally in lower-income areas of the country.
Pravina Raghavan, director of the Community Development Financial Institutions Fund, explains the fiscal 2024 impact to Financial Assistance awards was over $408 million. FA awards provide capital for CDFIs to finance affordable housing and increase homeownership among other services in low-income and distressed communities.
After the executive order was issued, there was a swift response from both Democratic and Republican representatives.
A letter co-authored by Sens. Mike Crapo (R-ID) and Mark Warner (D-VA), among others to Treasury Secretary Scott Bessent reaffirmed their support for the CDFI Fund, referencing its positive economic impact.
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Bessent said during his confirmation hearing earlier this year that he supported CDFIs. He said they played a "very important" role in their target communities.
Through the inception of the fund through February, Arkansas and South Carolina, two states that have voted for Republican presidential candidates since 2000, have received $3.2 billion, and $1.7 billion, respectively.
Rep. French Hill (R-AR) and Sen. Tim Scott (R-SC) have been strong proponents of the fund in the past.
In the letter to Bessent, the Defense Credit Union Council mentioned that a cut to the CDFI would impact 495 CFDI-backed credit unions, providing services for millions of U.S. citizens.According to the CDFI's annual report for fiscal 2024, funding was the highest it has ever been to date and yet, still did not fulfill all of the requests received.
"CDFIs play a key role with FHFA and our regulated entities in efforts to address the nation's affordable housing challenges, working on the ground in their communities to deliver positive outcomes for underserved households," then-Federal Housing Finance Agency Director Sandra L. Thompson said in November.
If the executive order stands, there would be an even greater disparity between requests for funding and resources allocated.
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This article Trump Administration's Push To Cut CDFI Funding Faces Bipartisan Backlash as Rural Homebuyers Risk Losing Critical Support originally appeared on Benzinga.com
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