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A Woke Agenda?
This holiday season has topped a year generous to the banking industry. Bank earnings reached a multi-decade high in the third quarter, and bank stock prices were up broadly. There was one gift that stopped giving, though, and that was funding for the Community Development Financial Institutions Fund.
The fund has grown in popularity over the years. Since its creation via legislation in the mid-1990s, the number of certified CDFIs have risen steadily to 1,426 at the end of fiscal year 2024, according to the latest figures from the CDFI Fund. Thirty-nine percent are loan funds, 14% are banks, and 35% are credit unions. Congressional funding also has grown over the years, to $324 million in fiscal year 2025.
Through a variety of grant and tax credit programs, CDFIs use those dollars to fund mortgages, low-income housing construction and small business loans, with a focus on high-poverty and low-income neighborhoods, including rural areas. They provide a “patient, flexible” capital stack often used in combination with private funds and government bond programs, according to CDFI Coalition lobbyist Bob Rapoza.
Currently, the White House has stalled this funding. Aside from $35 million for administrative expenses, the Office of Management and Budget has declined to allocate $289 million in funds that have been appropriated by Congress, with nine more months to go in the budget cycle, according to Rapoza. During the government shutdown in the fall, the administration tried to lay off CDFI Fund staff. Currently, they are back at work after Congress passed an appropriations bill to fund the government.
The White House believes CDFIs have a partisan and “woke” agenda, citing examples of those institutions promoting racial equity, “gender extremism” and climate initiatives. The libertarian Cato Institute has likened CDFIs to corporate welfare.
The American Bankers Association and the Independent Community Bankers Association, however, have opposed the move to restrict funding. In October, the ICBA backed a letter signed by 105 Republican members of Congress urging the Trump administration to carry out the statutory obligations of the fund.
“And certainly for rural CDFIs, which are very active, it's hard to find many rural local governments that are going to have the capital to invest in the CDFIs,” Rapoza says. “There's a track record of success. There's a lot of support in Congress, and we hope that'll be helpful in freeing up this funding.”
• Naomi Snyder, editor-in-chief for Bank Director
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