Amid orders to reduce the Community Development Financial Institutions (CDFI) Fund as much as possible, Treasury Secretary Scott Bessent is doing what he can to preserve it, according to a Bloomberg report.
The CDFI Fund provides tailored resources and programs that invest federal dollars in conjunction with private sector capital to support economically disadvantaged communities. The first CDFIs were formed in the 1970s to expand economic opportunities in areas where people and businesses faced hurdles to securing traditional loans due to insufficient credit history and lack of collateral. Then, Congress created the fund for them in 1994.
Now, more than $300 billion of mortgages and loans for small businesses and commercial real estate projects in low-income communities could be at stake, said Bloomberg. Last year, the fund gave $6.3 billion in awards, tax credits and guarantees.
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It was included in a White House executive order that lists government entities that should “reduce the performance of their statutory functions and associated personnel to the minimum presence and function required by law.” The order came just hours after Congress authorized a $324 million infusion for the opportunity program, according to the report.
During his confirmation hearing earlier this year, Bessent described the CDFI Fund as very important, and President Trump was thought to be a supporter based on his action to expand it during his first term.
Among those mobilized against a potential cut are Virginia Democrat Mark Warner and Idaho Republican Senator Mike Crapo, who released a joint statement reiterating bipartisan support for the fund. “Since 1994, the CDFI sector has grown to over 1,400 institutions, located in every state and territory in the nation — and leveraging at least $8 in private sector investment for every $1 in public funding received,” the statement said.
CDFI executives and lawmakers have been contacting Treasury officials to argue in support of the program, saying it is largely outlined by Congressional statute. Treasury staff working on the CDFI Fund met earlier this week and came away with the impression they would be engaging in minimal operations, Bloomberg reported.
Bessent said the department will submit a response to the Office of Management and Budget explaining which parts of the program are statutorily required and to what extent. “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.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
