Trump budget suggests eliminating some CDFI funds

Bloomberg News

WASHINGTON — The White House's proposed budget pitches eliminating Community Development Financial Institution Fund's discretionary awards. 

In President Donald Trump's proposed budget, the White House said that past awards have "made race a determinant of access to loan programs to 'advance racial equity,' funded products and services that built so-called climate resiliency,' and framed American society as inherently oppressive rather than fostering unity." 

"The CDFI industry has matured beyond the need for 'seed' money and should at this point be financially self-sustaining," the White House said. "Remaining funding supports oversight and closeout of prior awards, maintaining CDFI certification, and support for New Markets Tax Credit administration and the zero-cost Bond Guarantee Program." 

At the same time, the White House budget would create a new $100 million award program to "spur economic development in rural America." The program would require 60% of CDFI loans and investments to go to rural areas.

Industry groups immediately decried the cut.

"We are not aligned with the suggestion to eliminate the Community Development Financial Institutions (CDFI) Fund's discretionary awards," said Jim Nussle, America's Credit Unions president and CEO. "We do share the President's commitment to revitalizing rural communities — with credit unions currently operating roughly 900 branches that are the sole financial institutions in their census tracts, credit unions remain dedicated to serving all underserved communities, regardless of geography."

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The proposed budget comes after an executive order from the White House that would, among other measures, eliminate the CDFI fund to the extent allowed by law, given that the programs are set up by Congress. The order has sparked some confusion among Democratic lawmakers and within the industry, as CDFIs look ahead to recertification and the allocation of funds amid uncertainty about the future of the program.

While the Treasury Department, which administers the CDFI Fund, has said that all 11 programs that it runs are statutorily mandated, the White House has suggested that it still expects cuts. 

Congress, meanwhile, is pursuing various versions of a spending bill that will extend the Trump tax cuts while lowering spending. 

The House Financial Services Committee earlier this week passed a bill that eliminates the Public Company Accounting Oversight Board and caps the Consumer Financial Protection Bureau's budget at roughly $249 million, a drastic reduction from its recent budgets. Sen. Tim Scott, R-S.C., chairman of the Senate Banking Committee, has also said that he would target the CFPB when looking for cuts by capping the budget. 

Trump's budget would also cut roughly $33 billion in funding for the Housing and Urban Development Department, including slashing more than $26 billion in funding for rental assistance programs.