- Key insight: The CDFI Fund is getting a supplemental application, putting it back on track to receive the funding apportioned by Congress.
- Look forward: But the Office of Management and Budget hasn't given a timeline for when those funds will be disbursed, raising fears once again of pocket rescission.
- What's at stake: Millions of dollars for banks and other financial firms of all political stripes could be held back if this is the case.
WASHINGTON — The Community Development Financial Institutions Fund is back on track to get its approved funding from Congress despite
But there's some big caveats. The CDFI Fund yesterday released a supplemental application, removing climate-focused financing from a list of eligible activities to receive the funds. It also removed definitions of "eligible markets" related to race or ethnicity.
The supplemental application is due Oct. 27, but it could be delayed in the event of a government shutdown.
Treasury, where the CDFI Fund sits, held a meeting with lawmakers and other interested parties on Wednesday, according to two sources with direct knowledge of what happened in the meeting. They said that institutions that have applied for CDFI funds should still be able to participate in lending that would, for example, help build a solar farm or that would target minority communities.
Those institutions would not, however, get approved on the basis of those items being on their CDFI application, and it would not count positively toward firms' eligibility. CDFIs can now remove references to those items using the supplemental application, which was posted on Thursday.
The changes "promote consistency with recent court decisions regarding race-based preferences and reflect the current Administration's priorities, as reflected in the President's executive orders," Treasury said in the application posted to the Federal Register.
Attendees at the meeting were also told that the Office of Management and Budget has committed to disbursing the CDFI funds, the people said. This is a big step for the CDFI industry, which has been in a
OMB has not, however, committed to a timeline to dole out those funds. That leaves the door open that OMB might try what's called a "pocket rescission," where a president proposes expiring funding cuts too late in the fiscal year for Congress to have 45 days of session to consider them.
"Treasury's publication of the [Notice of Funding Availability] represents a major step forward," said Jeannine Jacokes, CEO of the Community Development Bankers Association, which advocates for CDFIs. "Treasury has gotten the green light to move forward, but we are still concerned that OMB has not released the apportionment, or indicate when it will do so. So we still have work to do."
