Alex Graf • Market Intelligence
Wednesday, June 25, 2025 1:08 PM ET
Advocates of Community Development Financial Institutions (CDFIs) are trying to convince a bipartisan coalition in Congress to keep funding and staffing levels intact after President Donald Trump proposed cuts. The federal CDFI Fund's $324 million appropriation for fiscal year 2025 is set to expire at the end of September, and Trump has proposed cutting $291 million from the fund in fiscal year 2026. Trump also issued an executive order in March calling for the fund to eliminate non-statutory functions and personnel, sparking fears of impending staff layoffs.
The industry's response to the order has been forceful, however, with letters of support for the CDFI Fund from the Conference of State Bank Supervisors, the National Association of State Credit Union Supervisors and 23 Senators, including both members and non-members of the Senate CDFI caucus. For now, the wave of support appears to have held any staffing cuts at bay, Jeannine Jacokes, CEO of the Community Development Bankers Association (CDBA), said in an interview. In late March, the Treasury Department issued a statement affirming that the CDFI fund and related programs are statutorily authorized. The statement also said that senior Treasury leadership has
consistently expressed support for CDFIs, that the CDFI Fund is operating normally and that
Treasury does not anticipate any disruptions. "People in Treasury told us that they heard from offices all over the Hill," Jacokes said. "House and Senate, both Democrats and Republicans. ... The bipartisan support that CDFIs have built over many years seems to be holding strong."
Fiscal Year 2026
The Trump administration argues that the CDFI industry has matured past the need for "seed" money and should be financially self-sustaining. It also says that past awards may have improperly made race a determining factor in loan program access, funded projects aimed at building climate resiliency and framed the US as inherently oppressive. But CDFIs serve some of the poorest communities in the country and often make loans of as
little as $500 that are too small to profit from, Peoples Bank President and CEO Dennis Ammann said in an interview. Cutting the CDFI Fund, which subsidizes that lending, would make such loans more costly for CDFIs and their customers, Ammann said.
"If CDFI banks can't afford to make a $500 loan, most people are going to go to payday lenders.
Those people are going to go to finance companies and that starts such a vicious debt cycle
and it's why some of these rural areas remain in poverty," Ammann said. "Because there's such
strong bipartisan support, I am hopeful."
CDFIs operate in more than 90% of congressional districts, and CDBA members regularly touch
base with elected officials, allowing them to build a broad base of support in Congress, Jacokes
said.
CDBA Chair and Southern Bancorp Inc. President and CEO Darrin Williams said he was encouraged to see continued support for CDFIs from lawmakers and regulators. Williams spoke with Rep. French Hill (R-AR), a former banker and former member of the CDFI Fund Advisory Board who chairs the House Financial Services Committee, and said Hill understands the work that CDFIs do. Williams also pointed to the Senate's CDFI Caucus, which consists of 28 senators, including 14 Republicans and 14 Democrats.
"You don't find that kind of bipartisanship in Congress much," Williams said. "We're really
pleased that we have that." In subsequent conversations with Treasury Secretary Bessent and other Treasury officials, Williams said they have been consistent in saying that CDFIs are a necessary and important part of the US financial system. "My conversations both with those who support our work, members of Congress and even
inside the Treasury have been very positive," Williams said.