A bill to amend the Community Development Banking and Financial Institutions Act of 1994 to provide for capitalization assistance to enhance liquidity.
This bill would expand and restructure how the Community Development Financial Institutions Fund (CDFI Fund) provides capitalization assistance to improve liquidity for community development financial institutions (CDFIs) and related entities. It authorizes the Fund to buy loans originated by CDFIs or interests in them, provide guarantees or credit enhancements, and otherwise bolster liquidity. It also broadens who can receive assistance (not limited to CDFIs), lifts the size limit and time restrictions on awards, and requires regular reporting to Congress. Additionally, it reallocates funds from the Emergency Capital Investment Funds into the Fund to support these activities and to provide technical assistance, with some waivers of existing restrictions. The overall aim is to increase lending capacity and the reach of community development financing, including affordable housing, by boosting liquidity and leveraging private capital.
Key Points
- 1Assistance scope: The Fund may provide funds to purchase loans originated by CDFIs, loan participations, or interests therein; provide guarantees, loan loss reserves, or other credit enhancements; and otherwise enhance liquidity for CDFIs.
- 2Eligibility and prioritization: Eligible recipients include organizations with a primary mission of promoting community development (not limited to CDFIs). The Fund will prioritize experience in loan purchases or asset transfers from CDFIs, capacity to increase lending or expand products, and the ability to serve broad geographic areas or highly unmet needs.
- 3Funding limits and flexibility: The cap for assistance under this section is raised from $5,000,000 to $20,000,000, and the previous restriction tied to a 3-year period is removed.
- 4Regulatory authority: The Secretary may issue regulations necessary to implement these authorities.
- 5Funding flows from ECIF: Funds from the Emergency Capital Investment Funds will be deposited into the Fund and used for financial assistance under section 113 and for financial/technical assistance under section 108 (with a waiver of a specified subsection of that section).
- 6Annual reporting: The Treasury Secretary must report to Congress annually (through 2028) on the use of the Fund, including amounts of purchases, housing loans supported, guarantees and credit enhancements, effects on competitiveness of CDFIs, and impacts on liquidity.