Bloomberg News
WASHINGTON — All 11 Community Development Financial Institutions Fund programs are required by law, the Treasury Department told the Office of Management and Budget, according to a document obtained by American Banker.
President Donald Trump earlier this month issued an executive order eliminating the “non-statutory” parts of a number of federal programs, including the CDFI Fund.
The move set off worry within the industry, especially as the Trump administration looks to purge any federal spending associated with “diversity, equity and inclusion.” Many programs in the CDFI Fund help CDFIs disburse money to groups that may fall under that umbrella, including Black-, women- or Native American-owned businesses.
The order also left many in the industry struggling to understand its impact, as trade groups for the CDFI industry argued that most — if not all — of the fund’s programs are legally mandated.
The Treasury Department appears to agree with them. In a report responding to the executive order directing the Treasury Department to submit to the OMB about the CDFI Fund, the Treasury Department said the fund “is performing its statutory functions as required by law.”
The Treasury in the report lists 11 programs or functions that the CDFI Fund runs, including the Native American CDFI Assistance Program, Small Dollar Loan Program and the CDFI Equitable Recovery Program. Each of these programs, the Treasury said in the report, is backed up by specific laws, which are listed next to the program.
“Accordingly, the CDFI Fund is performing its statutory functions as required by law,” the Treasury said in the report. “On an ongoing basis, the Treasury will evaluate the CDFI Fund to identify opportunities for improvement and enhance efficiencies.”
The White House in a statement to American Banker said that “no final decisions have been made” about the fate of the programs.
“The Treasury Department is considering a number of measures to increase efficiency, including a roll back of wasteful Biden-era hiring surges, and consolidation of critical support functions to improve both efficiency and quality of service,” a spokesman said in an emailed statement. “No final decisions have yet been made, and any current reporting to the contrary is false.”
The Treasury did not respond to a request for comment.
The president’s executive order on the CDFI Fund saw some bipartisan pushback — a rarity in Trump’s Washington. Sens. Mike Crapo, R-Idaho, and Mark Warner, D-Va., coheads of the CDFI caucus, led a letter to the Treasury Department asking Secretary Scott Bessent to preserve the programs. The caucus was formed in 2022.
“The important work of the CDFI sector is strengthened by the CDFI Fund, which provides seed funding to new CDFIs, grows the capacity of existing CDFIs, and provides oversight to ensure federal dollars are spent appropriately,” the lawmakers said in the letter to Bessent. “Elimination of key CDFI Fund functions would undermine this important progress, including for small businesses and homeowners.”
Other key lawmakers did not protest the executive order, however. Chairman of the Senate Banking Committee Tim Scott, R-S.C., and House Financial Services Committee Chairman French Hill, R-Ark., did not sign on to the letter. In statements to American Banker, they did not say that they would contest the elimination of the CDFI Fund with the White House.
