U.S. Sens. Mark D. Warner (D-VA) and Mark Crapo (R-ID) recently announced the creation of the 14-member bipartisan Senate Community Development Finance Caucus (CDFC). The purpose of the CDFC is to support the missions of Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), which exist to increase lending in low and moderate-income (LMI) communities. CDFIs play a major role in bringing affordable credit to underserved communities, which typically are disadvantaged urban and rural communities nationwide.
Previously, Sen. Warner worked with Sen. Crapo and others to introduce the Jobs and Neighborhood Investment Act, a part of the larger December 2020 COVID relief package. This bill provided a $12 billion investment in CDFIs and MDIs, including $3 billion for grant funding and $9 billion for tier-one-capital investments.
In creating the CDFC, Sens. Warner and Crapo pointed out that although CDFIs are making a difference, they still lack the resources to fulfill their full potential. In addition to the legislation mentioned above, Congress allocated $9 billion in capital for long-term preferred stock and subordinated debt investments in CDFIs and MDIs through the Emergency Capital Investment Program. Furthermore, Congress awarded $1.25 billion in grants to 863 CDFIs to respond to the pandemic and $1.75 billion in grants and technical assistance to expand CDFI activities through the Rapid Response and Equitable Recovery Program. Still, when considering the awards available versus the awards requested in these and similar programs, the need dwarfs the available funds.
CDFC pledges to create a strategic, coordinated approach to increase opportunities for CDFIs. They are looking to coordinate and expand the private sector and government efforts to build on recent momentum by Congress in these funding initiatives by focusing on four key areas:
- Education of members and staff as to the challenges facing community-based lenders
- Coordination of regulatory and legislative bipartisan efforts related to CDFIs
- Legislation to further support CDFIs and MDIs
- Tracking of federal legislation and private sector commitments
Many organizations and financial institutions have enforced the CDFC, including the National Bankers Association, the Community Development Bankers Association, the Opportunity Finance Network, Inclusiv, the African-American Credit Union Coalition, the National Association of Latino Credit Unions and Professionals, the Local Initiatives Support Corporation, the American Bankers Association, the Hope Credit Union, MoFi, the Independent Community Bankers of America, the Northwest Native Development Fund, the Native CDFI Network, and the CDFI Coalition.
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