Latest news with #CDFIFund
Yahoo
14-04-2025
- Business
- Yahoo
Trump Administration's Push To Cut CDFI Funding Faces Bipartisan Backlash as Rural Homebuyers Risk Losing Critical Support
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. 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. Don't Miss:Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – 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. Trending: BlackRock is calling 2025 the year of alternative assets. 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. 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. Read Next: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — , which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. Send To MSN: 0 This article Trump Administration's Push To Cut CDFI Funding Faces Bipartisan Backlash as Rural Homebuyers Risk Losing Critical Support originally appeared on
Yahoo
21-03-2025
- Business
- Yahoo
Future Of CDFI Fund And MBDA, Uncertain With Their Planned Ouster
The Community Development Financial Institutions Fund (CDFI Fund) has invested over $8 billion through various monetary award programs, helping underserved people and communities. The Minority Business Development Agency (MBDA) helped wrap up $3.8 billion in contracts for minority businesses in 2023. That drive is significant as it can help those firms, including Black-owned businesses, to scale up and potentially fuel revenue growth. However, the downside now is the CDFI Fund and MBDA — deep-rooted and bipartisan supporters of Black entrepreneurs and individuals, among others — are being cut by President Donald Trump. They are among seven agencies proposed for elimination as part of a new executive order that continues Trump's actions to cut federal government spending. The CDFI Fund supplies financial backing to Community Development Financial Institutions (CDFIs) via grants, bond guarantees, and tax credits. CDIFs were created to spur community development in local communities. Their work includes funding affordable housing and small minority-owned businesses. They provide loans and other financial products in underserved communities, often with lower fees than rivals like mainstream banks and payday lenders. The CDFI Fund 'plays an important role in generating economic growth and opportunity in some of our nation's most distressed communities,' per its website. The order commands the fund to trim personnel and operations. Started in 1994, the CDFI Fund is part of the U.S. Treasury Department. Industrywide, CDFIs had roughly $452 billion in assets as of the first quarter of 2023. That consisted of $300B for credit unions, $118B for banks, and $35B for loan funds, according to the Federal Reserve Bank of New York. According to its 2024 annual report, the 'CDFI Fund award recipients successfully leverage billions in private sector investment to create jobs, build affordable housing, build essential community facilities, and provide financial counseling.' That includes investing in 'distressed and underserved communities lacking access to traditional lending or banking institutions.' The report also stated that $81 billion has been supplied through the fund's New Markets Tax Credit program. The CDFI Fund declared that since its start, it has helped build the capacity of 1,400 Certified CDFIs in all 50 states along with the District of Columbia, Guam, and Puerto Rico. Trump's order occurred the same day he signed a continuing resolution into law that calls for $324 million in funding for the CDFI Fund for fiscal 2025. It's unknown if prior approved grants will be paid for financial institutions now utilizing CDFI Fund grants. In an email to BLACK ENTERPRISE, U.S. Treasury Secretary Scott Bessent stated, 'This Administration recognizes the important role that the CDFI Fund and CDFIs play in expanding access to capital and providing technical assistance to communities across the United States. CDFIs are a key component of President Trump's commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity.' He added, 'As required by President Trump's March 14, 2025, Executive Order, the Treasury Department will provide a response to the Director of the OMB on this matter and looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans.' As for the MBDA, Trump's latest dictate marks the second time since 2017 he has tried to erase the agency catering to minority firms for over 50 years. The MBDA's efforts have included providing access to capital, contracts, and market opportunities as part of the U.S. Department of Commerce. Two years ago, the agency also brought access to $1.5 billion in capital to empower minority businesses and helped them generate or protect over 19,000 jobs, according to its website. Efforts to get a comment from the MBDA were unsuccessful. William Michael Cunningham, an economist and founder of Creative Investment Research, told BLACK ENTERPRISE by email that his firm has long recognized the CDFI Fund's significant role in strengthening Black economic empowerment. For a decade (2013 through 2023), Cunningham estimates that at least $219 million from the CDFI Fund has supported Black-owned banks and businesses through targeted programs. Specifically, he says around $31 million has benefited Black-owned banks via the fund's Bank Enterprise Award program, directly enhancing their capacity to serve communities often overlooked by mainstream financial institutions. Further, Cunnigham mentioned about $188 million has flowed to Black-led Community Development Financial Institutions, fueling lending and investment in Black-owned businesses nationwide. He stated notable recipients include institutions like Hope Credit Union, TruFund Financial Services, and Community First Fund, whose critical efforts drive economic justice, equity, and opportunity in underserved Black communities. 'Ongoing disparities underscore the need for significantly increased funding and new, innovative support mechanisms.' Cunningham shared that the potential reduction in support from the CDIF Fund and MBDA poses significant risks to minority businesses. He says it could lead to reduced access to capital and funding shortages, severely limiting the businesses' growth and sustainability. He expressed that the scarcity of business development support, including strategic guidance and capacity building, could impact competitiveness. Another potential snag: The loss of networking and market access facilitated by these agencies could negatively impact revenue generation. The Small Business Majority advocacy group criticized Trump's latest order. The group's research showed that the institutions play a large role in benefiting women BIPOC-owned small businesses. Some 24% of respondents polled last year declared that a government program geared to help a specific demographic group prevented their business from closing, and 14% stated a demographically targeted program helped them gain contracts. Of small businesses that got publicly funded support, roughly 25% had help from MBDA. In a statement, Small Business Majority Founder and CEO John Arensmeyer touched on the impact of shattering the CDIF Fund and MBDA. Among his comments, he noted that between 2021 and 2024, there were 21 million new business applications. But he added that these fledgling small businesses cannot succeed or survive without support. 'President Trump may well succeed in undermining our smallest and most under-resourced businesses, but in doing so, our economy and our communities will be devastated. Instead of searching for ways to cut small business programs no matter their size or purpose, President Trump should be looking for ways to boost entrepreneurship.' RELATED CONTENT:
Yahoo
19-03-2025
- Business
- Yahoo
Bessent Resists DOGE Cuts That Put Low-Income Lending Program Under Fire
(Bloomberg) -- President Donald Trump's aggressive government cost-cutting agenda is forcing his Treasury chief to balance support for that mission with efforts to protect a crucial financial lifeline for millions of low-income Americans. NYC Plans for Flood Protection Without Federal Funds Despite Cost-Cutting Moves, Trump Plans to Remake DC in His Style A Malibu Model for Residents on the Fire Frontlines The Scary Thing About the Wildfire That Was Stopped Treasury Secretary Scott Bessent is trying to preserve the Community Development Financial Institutions Fund while also adhering to an order from Trump that his department reduce the initiative to the maximum extent allowed by law, according to people familiar with the matter who aren't authorized to speak to the media. At stake is more than $300 billion in mortgages and loans for small businesses and commercial real estate projects in low-income communities, largely across Republican-controlled states like Mississippi and Louisiana. This infusion of capital into under-served communities comes from lenders known as community development financial institutions. A White House executive order on Friday named the CDFI Fund on a list of governmental entities that should 'reduce the performance of their statutory functions and associated personnel to the minimum presence and function required by law.' The order is part of the Elon Musk-led Department of Government Efficiency's efforts to 'reduce the federal bureaucracy.' The order, which came just hours after Congress authorized a fresh $324 million infusion for the fund, caught CDFI industry officials by surprise. Just two months earlier, Bessent had described the program as 'very important' during his confirmation hearing; Trump was seen as a supporter too, after expanding the pool of cash the CDFI Fund could distribute to lenders in his first term. The first CDFIs were formed in the 1970s to expand economic opportunities in areas where there were no for-profit banks, facilitating lending to people and businesses unable to get traditional loans due to hurdles like insufficient credit history or lack of collateral for loans. Bankers Mobilize Congress created the CDFI Fund in 1994 to expand CDFIs' reach. The Fund gave $6.3 billion in awards, tax credits and guarantees last year. CDFIs also receive investments and donations from Wall Street firms and big donors, maintaining a critical pipeline of capital to almost nine million people. Bankers and industry executives quickly mobilized to lobby lawmakers and Treasury officials. Mark Warner of Virginia, a Democrat, and Republican senator Mike Crapo of Idaho, released a joint statement on Sunday reiterating bipartisan support for the CDFI Fund. Warner spoke directly with Bessent, while Crapo's office has been in communication with the Secretary's staff on the matter, according to people familiar with the conversations. CDFI executives said they received phone calls from investors concerned that a sharp withdrawal of public funds from the industry could hurt their own investments. 'I got an email this morning from an investor and he says, 'Are we going to be safe? Should we reconsider our investments?'' Dominik Mjartan, vice chair of South Carolina-based CDFI Optus Bank, said on Monday. CDFI executives and lawmakers supporting the program began calling Treasury officials to argue that the program was largely outlined by Congressional statute. They were desperate for reassurance that the program was not at risk of being cut, according to people familiar with the conversations who declined to be named discussing private matters. The Meeting On Monday, Treasury staff working on the CDFI Fund were convened to a meeting to discuss the order and left with the impression that they would be engaging in 'minimal operations,' according to a person familiar who asked not to be identified discussing a private gathering. Fund staff had already been working outside the main Treasury building since January, in an office without Internet connection, according to people with knowledge of the working conditions. A person familiar with the Treasury's operations said that officials were working on hooking up a connection. 'CDFIs are a key component of President Trump's commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity,' Bessent said in a statement Monday night. But he added that the department will, as per the requirements of the executive order, submit a response to the Office of Management and Budget. The executive order asked for a report explaining which parts of the program are statutorily required and to what extent. A senior Treasury official would not rule out cuts to the CDFI Fund's programs and staff. The official said Tuesday that Treasury will review the program for potential improvements to efficiency and cost savings, and that the results of that review should not be prejudged. The Hope Still, some industry experts interpreted Bessent's statement as providing explicit support for the fund's staff and operations. They pointed out that the Treasury Secretary said in his Monday statement that he 'looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans.' Others appeared less sanguine about the program's prospects and continued to call on the administration to leave the program alone. 'I urge political leaders on both sides of the aisle to ensure the CDFI Fund can carry out its mission at full capacity,' Randall Leach, CEO of California-based CDFI Beneficial State Bank, said in a statement. 'The financial wellbeing of millions of Americans and the vibrancy of neighborhoods across our country depend on it.' --With assistance from Daniel Flatley. Tesla's Gamble on MAGA Customers Won't Work The Real Reason Trump Is Pushing 'Buy American' How TD Became America's Most Convenient Bank for Money Launderers The Future of Higher Ed Is in Austin A US Drone Maker Tries to Take Back the Country's Skies ©2025 Bloomberg L.P.
Yahoo
19-03-2025
- Business
- Yahoo
Trump's order to cut main street lending program earns GOP rebuke
Republican lawmakers are expressing apprehension over a plan by the Trump administration to gut federal spending on a program some have called a 'lifeline' for small businesses in districts and states they represent. President Donald Trump issued an executive order late Friday directing agencies to eliminate 'to the maximum extent' the Community Development Financial Institutions Fund — a longtime, bipartisan program that provides millions of dollars annually to lenders operating in poorer rural and urban areas underserved by big banks. 'The CDFI Fund is a lifeline for underserved populations to access capital & directly supports multiple Orange County credit unions that serve our community,' Rep. Young Kim (R-Calif.), a House Financial Services member, said on X. 'This partnership represents the best of public-private sector collaboration & deserves our continued bipartisan support.' Trump's proposal to cut the fund crosses into an area lawmakers are loath to touch — assistance for the main street business community many GOP members turned to for support during the election. The administration's latest action, which could more heavily impact red districts, may show the limits of Republican support for the administration's cost-cutting crusade. House Financial Services Chair French Hill (R-Ark.) and Senate Banking Chair Tim Scott (R-S.C.) have also historically been strong proponents of the targeted fund. From the inception of the CDFI Fund in 1994 through February 2025, Arkansas-headquartered CDFIs have received $187.9 million from the fund and South Carolina- headquartered CDFIS have received $75.3 million, according to the CDFI Coalition, an industry advocacy group. 'Chairman Hill knows the impact CDFIs can have on communities, particularly in rural areas,' said Brooke Nethercott, a spokesperson for Hill, a former community banker. 'Our Committee looks forward to learning more from the administration.' Arkansas Capital Corp., a private, nonprofit special project finance company in Hill's district, often works with rural areas and has received $7.4 million in CDFI funds since 2017. Sam Walls, CEO of the corporation, said the executive order 'came out of left field.' There's a 'lot of uncertainty' in the industry at the moment and 'clarity would be helpful sooner rather than later,' Walls said. A spokesperson for Scott said the lawmaker 'has long supported efforts to increase access to capital in underserved communities and will continue to work with his colleagues and the Trump administration to unleash both private and public investment in areas across the country that need it most, whether that's through the CDFI Fund or other programs.' Scott, during the height of the Covid pandemic, defended at a hearing the 'significant role' of CDFIs in providing financial services to Black- and Hispanic-owned businesses that were disproportionately hit by the crisis. During his confirmation hearing in January, Treasury Secretary Scott Bessent said he supported CDFIs and said their role in underserved communities is 'very important.' He issued a statement this week that appeared to be sensitive to lawmakers' concerns. 'CDFIs are a key component of President Trump's commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity' and the Treasury Department will provide a response to the Director of the OMB, as requested by the Executive Order, Bessent said. The Treasury 'looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans,' Bessent said. Sens. Mark Warner (D-Va.) and Mike Crapo (R-Idaho), co-chairs of the Senate CDFI caucus, issued a joint statement of continued support for the CDFI Fund. 'As co-chairs of the Community Development Finance Caucus, a group which has grown to 28 members, 14 Democrats and 14 Republicans, we are proud to reaffirm our bipartisan commitment to support the CDFI Fund's mission,' the lawmakers said. It remains to be seen if Trump has any power to actually cut the fund, though that hasn't stopped the president from attempting to take actions beyond his executive authority. The executive order directs the administration to take the function and personnel of the CDFI Fund and other programs "to the minimum presence and function required by law." The CDFI Fund was established by Congress under a bipartisan law, the Riegle Community Development and Regulatory Improvement Act of 1994. 'The CDFI Fund and its programs are fully authorized,' said Jeannine Jacokes, CEO of the Community Development Bankers Association. But she said the group is 'concerned about any potential staffing cuts, and you know, unclear what the impact of this executive order is.' Other community banking groups expressed similar concern and confusion over the order. The Defense Credit Union Council, which represents credit unions that serve military personnel and veterans, said the order could have a major impact on military communities. 'Military installations are often located in rural or lower-income regions lacking adequate financial infrastructure, and a large portion of junior enlisted service members meet the CDFI Fund's 'Low Income Targeted Population' criteria,' the organization wrote in a letter to Hill, Scott, and Sen. Elizabeth Warren (D-Mass.) and Rep. Maxine Waters (D-Calif.), the ranking members of the Banking and Financial Services committees, respectively. CDFIs cannot expand economic opportunity on 'Main Street America' without the CDFI Fund, Jacokes said. 'The CDFI Fund provides the flexible capital for them to design products and services that meet the needs of low income places as well as people,' Jacokes said. 'Now in the event of an economic downturn, policy makers will need CDFIs, because CDFIs have the unique ability to go deep into markets and promote recovery.' One of the main reasons CDFI Funds are "nonpartisan" is that 92 percent of the 435 voting congressional districts have at least one CDFI physically located within and serving the local communities, with half of the districts Republican and half Democrat, Jacokes said. 'But if you break it down to the where the physical offices, the number of physical offices, 60 percent are in Republican-held districts,' Jacokes said.
Politico
19-03-2025
- Business
- Politico
Trump's order to cut main street lending program earns GOP rebuke
Republican lawmakers are expressing apprehension over a plan by the Trump administration to gut federal spending on a program some have called a 'lifeline' for small businesses in districts and states they represent. President Donald Trump issued an executive order late Friday directing agencies to eliminate 'to the maximum extent' the Community Development Financial Institutions Fund — a longtime, bipartisan program that provides millions of dollars annually to lenders operating in poorer rural and urban areas underserved by big banks. 'The CDFI Fund is a lifeline for underserved populations to access capital & directly supports multiple Orange County credit unions that serve our community,' Rep. Young Kim (R-Calif.), a House Financial Services member, said on X. 'This partnership represents the best of public-private sector collaboration & deserves our continued bipartisan support.' Trump's proposal to cut the fund crosses into an area lawmakers are loath to touch — assistance for the main street business community many GOP members turned to for support during the election. The administration's latest action, which could more heavily impact red districts, may show the limits of Republican support for the administration's cost-cutting crusade. House Financial Services Chair French Hill (R-Ark.) and Senate Banking Chair Tim Scott (R-S.C.) have also historically been strong proponents of the targeted fund. From the inception of the CDFI Fund in 1994 through February 2025, Arkansas-headquartered CDFIs have received $187.9 million from the fund and South Carolina- headquartered CDFIS have received $75.3 million, according to the CDFI Coalition, an industry advocacy group. 'Chairman Hill knows the impact CDFIs can have on communities, particularly in rural areas,' said Brooke Nethercott, a spokesperson for Hill, a former community banker. 'Our Committee looks forward to learning more from the administration.' Arkansas Capital Corp., a private, nonprofit special project finance company in Hill's district, often works with rural areas and has received $7.4 million in CDFI funds since 2017. Sam Walls, CEO of the corporation, said the executive order 'came out of left field.' There's a 'lot of uncertainty' in the industry at the moment and 'clarity would be helpful sooner rather than later,' Walls said. A spokesperson for Scott said the lawmaker 'has long supported efforts to increase access to capital in underserved communities and will continue to work with his colleagues and the Trump administration to unleash both private and public investment in areas across the country that need it most, whether that's through the CDFI Fund or other programs.' Scott, during the height of the Covid pandemic, defended at a hearing the 'significant role' of CDFIs in providing financial services to Black- and Hispanic-owned businesses that were disproportionately hit by the crisis. During his confirmation hearing in January, Treasury Secretary Scott Bessent said he supported CDFIs and said their role in underserved communities is 'very important.' He issued a statement this week that appeared to be sensitive to lawmakers' concerns. 'CDFIs are a key component of President Trump's commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity' and the Treasury Department will provide a response to the Director of the OMB, as requested by the Executive Order, Bessent said. The Treasury 'looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans,' Bessent said. Sens. Mark Warner (D-Va.) and Mike Crapo (R-Idaho), co-chairs of the Senate CDFI caucus, issued a joint statement of continued support for the CDFI Fund. 'As co-chairs of the Community Development Finance Caucus, a group which has grown to 28 members, 14 Democrats and 14 Republicans, we are proud to reaffirm our bipartisan commitment to support the CDFI Fund's mission,' the lawmakers said. It remains to be seen if Trump has any power to actually cut the fund, though that hasn't stopped the president from attempting to take actions beyond his executive authority. The executive order directs the administration to take the function and personnel of the CDFI Fund and other programs 'to the minimum presence and function required by law.' The CDFI Fund was established by Congress under a bipartisan law, the Riegle Community Development and Regulatory Improvement Act of 1994. 'The CDFI Fund and its programs are fully authorized,' said Jeannine Jacokes, CEO of the Community Development Bankers Association. But she said the group is 'concerned about any potential staffing cuts, and you know, unclear what the impact of this executive order is.' Other community banking groups expressed similar concern and confusion over the order. The Defense Credit Union Council, which represents credit unions that serve military personnel and veterans, said the order could have a major impact on military communities. 'Military installations are often located in rural or lower-income regions lacking adequate financial infrastructure, and a large portion of junior enlisted service members meet the CDFI Fund's 'Low Income Targeted Population' criteria,' the organization wrote in a letter to Hill, Scott, and Sen. Elizabeth Warren (D-Mass.) and Rep. Maxine Waters (D-Calif.), the ranking members of the Banking and Financial Services committees, respectively. CDFIs cannot expand economic opportunity on 'Main Street America' without the CDFI Fund, Jacokes said. 'The CDFI Fund provides the flexible capital for them to design products and services that meet the needs of low income places as well as people,' Jacokes said. 'Now in the event of an economic downturn, policy makers will need CDFIs, because CDFIs have the unique ability to go deep into markets and promote recovery.' One of the main reasons CDFI Funds are 'nonpartisan' is that 92 percent of the 435 voting congressional districts have at least one CDFI physically located within and serving the local communities, with half of the districts Republican and half Democrat, Jacokes said. 'But if you break it down to the where the physical offices, the number of physical offices, 60 percent are in Republican-held districts,' Jacokes said.
