The Obama administration favors additional funding for community development banks, viewing that as a way to help finance small businesses and promote job growth, a senior Treasury Department official said Tuesday.
President Obama's fiscal 2011 budget seeks an additional $250 million of funding for community development financial institutions, or CDFIs, said Michael Barr, the assistant Treasury secretary for financial institutions, in testimony prepared for a House Financial Services Committee hearing.
The budget request came after a Treasury Department effort to extend low-cost capital to community banks, thrifts and credit unions, matching private capital investments with federal funds on a dollar-for-dollar basis, provided the financial company's primary regulator signs off on the capital injections.
"We strongly believe that further support is needed for CDFIs to help … distressed areas manage through the economic downturn," Barr said in his prepared statement.
As part of that effort, the administration is requesting $50 million for a "Bank on USA" program to promote financial education, increase access to bank accounts and help people build solid credit histories, Barr said in his prepared remarks.