WASHINGTON — Lawmakers and representatives of the community development financial institutions, or CDFIs, bemoaned potential obstacles and cuts to government funding of those institutions during a Senate Banking Committee hearing.
A Biden administration proposal to overhaul the certification process for CDFIs — as well as potential cuts to the CDFI fund proposed by some Republican lawmakers — came under fire at a Senate Banking subcommittee hearing on Tuesday. Lawmakers on both sides of the aisle were broadly supportive of the public mission of CDFIs, and pushed back on any incursion into their funding or certification.
Sen. Bob Menendez, D-N.J., who is
"Republicans in the House have spent the last few months debating draconian cuts to domestic programs that hardworking Americans rely on, including the CDFI fund," he said. "In July the House Appropriations Committee passed a bill that cut funding for CDFIs by $45 million, a near 15 percent cut from fiscal year 2023."
Because of the popularity of CDFIs,
But that doesn't mean that CDFIs are without controversy. Earlier this year, the Treasury Department announced that it would revamp the application process for CDFIs, in an effort to better vet the institutions that receive the label, which comes with access to some government funding. Some lawmakers are concerned about that review.
"In exchange for doing this essential work, CDFIs are given access to subsidized funds and grant money supplemental with private funds. So I'm a little disheartened that the Treasury Department in managing the CDFI fund has not given CDFIs the certainty and flexibility they need to do their work," said Sen. Cynthia Lummis, R-Wyo., ranking member of the subcommittee on housing, transportation and community development. "As Treasury revises the certification process, many stakeholders have raised concerns about the proposed application, and the delays in finalizing the application, and the transparency of the process."
Julia Nelmark, president and CEO of Midwest Minnesota Community Development Corporation and a witness at the subcommittee hearing, told Menendez that cuts would cause the mission of CDFIs to suffer.
"Just at a high level, to cut $45 million would cut nearly a half a billion dollars of community lending and investment," she said. And specifically to each of us, it would cut out a lot of our activity that we're able to do in our communities, and that can be devastating for some in those areas that we serve."
