WASHINGTON — The Obama administration favors additional funding for community development banks, viewing that as a way to help finance small businesses and spur job growth, a senior Treasury Department official said Tuesday.
President Barack Obama's fiscal 2011 budget plan seeks an additional $250 million of funding for assistance to community development financial institutions, or CDFIs, Assistant Treasury Secretary for Financial Institutions Michael Barr said in testimony prepared for delivery at a House Financial Services Committee hearing.
The request follows 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 firm's primary regulator signs off on the capital injections.
"We strongly believe that further support is needed for CDFIs to help serve 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. He added that the program also will promote "much needed private sector innovation" in consumer finance for low- and moderate-income Americans.
A separate initiative to increase the availability of affordable, healthy food in urban and rural areas is slated to receive more than $400 million, mostly through new market tax credits authorized by the 2009 economic-stimulus law. Barr said $25 million of proposed food aid would be allocated to CDFIs.