On February 16, the House Committee on Financial Services held a hearing entitled, “An Unprecedented Investment for Historic Results: How Federal Support for MDIs and CDFIs Have Launched a New Era for Disadvantaged Communities.” Three of the five witnesses represented OFN member organizations. Each of these CDFI CEOs made a powerful case for the value of federal support in enabling CDFIs to increase their impact in low-wealth communities. The witnesses were:
- Bill Bynum, CEO, HOPE (Hope Credit Union/Hope Enterprise Corporation/Hope Policy Institute) (OFN member)
- Everett K. Sands, CEO, Lendistry (OFN member)
- Luz Lopez Urrutia, CEO, Accion Opportunity Fund (OFN member)
- Nicole Elam, Esq., President & CEO, National Bankers Association
- Michael Faulkender, Dean’s Professor of Finance, Smith School of Business, University of Maryland
During the hearing, Rep. Carolyn Maloney (D-NY) mentioned her efforts to build bipartisan support for increasing annual appropriations for the Department of Treasury’s CDFI Fund in the House-passed FY 2022 Financial Services and General Government (FSGG) appropriations bill.
Rep. Maloney also highlighted the power of pandemic relief resources such as the CDFI Rapid Response Program and the Emergency Capital Investment Program (ECIP) authorized in the Consolidated Appropriations Act of 2021. HOPE Enterprise’s CEO, Bill Bynum, emphasized how CDFIs were able to fill market gaps during the economic downturn to sustain businesses and that these institutions still need additional federal resources like increased annual CDFI Fund appropriations in the future.
Rep. Nydia Velazquez (D-NY) praised CDFIs’ performance reaching women- and minority-owned businesses with the Paycheck Protection Program (PPP). As Chairwoman of the House Committee on Small Business, Rep. Velazquez discussed the Small Business Lending Disclosure Act, which aims to protect small business borrowers from predatory lenders and loans carrying unfair terms and conditions.
Rep. French Hill (R-AR) inquired if the increase in the number of certified CDFIs dilutes the mission of existing CDFIs and if reporting requirements around the Consumer Financial Protection Bureau’s (CFPBs) Section 1071 small business data collection rule will pose a challenge to lenders and small businesses.
Rep. David Scott (D-GA) discussed the critical role microloans play in driving capital to underserved entrepreneurs with Luz Lopez Urrutia, CEO at OFN member Accion Opportunity Fund. Ms. Urrutia underscored how CDFI microloans provide responsible capital to startups and sole proprietorships, as well as other businesses impacted by the pandemic conditions.
Rep. Gregory Meeks (D-NY) talked about the importance of technology in helping the CDFI industry scale. He applauded the reintroduction of the Ensuring Diversity in Community Banking Act, which aims to preserve and promote minority banks and credit unions, strengthen programs that provide capital to these institutions, and create an Impact Bank designation for community banks predominantly serving disadvantaged communities.
Rep. Emanuel Cleaver (D-MO) questioned witnesses on the effectiveness of the CDFI Bond Guarantee program while also highlighting the CDFI Bond Guarantee Program Improvement Act, which reduces the minimum bond size from $100 million to $25 million, allowing smaller CDFIs to utilize the program.
Rep. Joyce Beatty (D-OH) underscored the challenges of creating and expanding Minority Depository Institutions (MDIs) nationwide. She discussed the Expanding Opportunity for MDIs Act. Rep. Beatty ended her questioning by expressing concerns about the lack of resources for Black-owned financial institutions with National Bankers Association’s CEO Nicole Elam.
Policymakers and witnesses also discussed other legislative proposals regarding CDFIs and MDIs during the hearing including:
- The Federal Home Loan Banks’ Mission Implementation Act – Rep. Ritchie Torres (D-NY)
- The Promoting and Advancing Communities of Color Through Inclusive Lending Act – Rep. Maxine Waters (D-CA)
- The Advancing Technologies to Support Inclusion Act
- The CDFI Certification Consultation Act
- The Supporting the Creation of Diverse and Mission-Driven Community Financial Institutions Act
- The Understanding Community Financial Institutions’ Impact in Underserved Communities Act
This event continues a series of hearings focused on CDFIs in the 117th Congress.
Most recently, the Senate Banking Committee convened CDFI leaders to discuss the industry’s impact on underserved populations. The Senate Banking Committee also held its first hearing of 2022 featuring three CDFI leaders testifying before the Subcommittee on Housing, Transportation, and Community Development. Over the last year, Congress held additional hearings focused on housing, the partnerships between CDFIs and private sector, and investing in rural communities.
OFN welcomes the heightened Congressional interest in CDFIs.