Senators announce bipartisan caucus to support CDFIs, MDIs

WASHINGTON — A bipartisan group of U.S. senators announced the creation of a new legislative caucus for the community development financial institution industry, Democratic Sen. Mark Warner of Virginia announced on Monday. 

A subset of smaller financial institutions certified by the Treasury Department to do a certain portion of their business in low-income communities, CDFIs have existed since the 1990s but have taken on increasing relevance in recent years and become the target of billions of dollars in new federal funding. 

In a video released Monday morning, Warner said the caucus would focus its efforts on supporting CDFIs as well as minority depository institutions, a federal designation for banks controlled by a majority of Black, Indigenous or other stakeholders of color. 

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“This proud tradition of how we make sure there are institutions that will service communities that may not have the same traditional access to traditional banks is extraordinarily important,” Warner said in the video. “I know this firsthand as a former entrepreneur.” 

Warner said that Republican Sen. Mike Crapo of Idaho was a key partner in creating the caucus and will co-chair the group. Democratic lawmakers in the caucus include Sens. Amy Klobuchar of Minnesota, Jon Ossoff of Georgia, Jack Reed of Rhode Island, Tina Smith of Minnesota, Chris Van Hollen of Maryland and Raphael Warnock of Georgia. 

Among Republicans, Crapo will be joined by Sens. Mike Braun of Indiana, Steve Daines of Montana, Cindy Hyde-Smith of Mississippi, Cynthia Lummis of Wyoming, Jerry Moran of Kansas and Mike Rounds of South Dakota. 

The announcement comes two weeks after Warner introduced the Scaling Community Lenders Act with Republican Sen. Bill Haggerty of Tennessee. That bill would attempt to funnel more private capital towards CDFIs. 

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Policymakers have focused on funding economic recovery efforts in hard-hit communities following the COVID-19 pandemic as well as the summer of 2020’s racial justice protests. Under the Trump administration, lawmakers set aside $30 billion for CDFIs under the Paycheck Protection Program.

The Biden administration has also elevated the role of CDFIs in its first two years in office. The American Rescue Plan, enacted in March 2021, included $10 billion for state small-business lending programs that benefit CDFIs. Congress also appropriated $1.25 billion to the Treasury Department’s Rapid Response Program for CDFIs, which provided automatic grant funding to qualifying CDFIs.