Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, and Congressman Gregory Meeks (D-NY), Chair of the Subcommittee on Consumer Protection and Financial Institutions, introduced the “Promoting and Advancing Communities of Color Through Inclusive Lending Act,” legislation which would build on the Committee’s work to support Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) and help to increase affordable lending in minority communities, including to small businesses and minority-owned businesses, which have been hardest hit during the COVID-19 pandemic crisis.
“Communities of color are suffering disproportionately both from the coronavirus and from its economic impact,” said Chairwoman Waters. “During this crisis, CDFIs and MDIs have provided a financial lifeline and have been very effective at getting much needed capital and relief to communities of color, and especially to that are struggling. This legislation is designed to provide resources to that pipeline, and ensure a robust recovery.”
“As Chairman of the House Financial Service Subcommittee on Consumer Protection and Financial Institutions, my focus has been squarely on addressing the inequities faced by unbanked and underbanked communities, and communities of color that bear the burden of decades of structural discrimination and exclusion, including in banking and financial services,” said Chair Meeks. “Low income, and minority communities have borne the brunt of the burden of the COVID pandemic in terms of infections, lives lost, jobs lost, small business impact, and community dis-investment. Investing in these communities is a moral imperative, key to stemming the economic and social impact of the pandemic, and spurring an equitable economic recovery. Investing in minority banks and community development financial institutions is a proven way to lift these communities and reverse the harmful legacy of redlining and disinvestment. I look forward to continuing to work with Chairwoman Waters to advance these issues.”
Additional cosponsors include Congressman Wm. Lacy Clay (D-MO), Chair of the Subcommittee on Housing, Community Development and Insurance, Congressman Al Green (D-TX), Chair of the Subcommittee on Oversight and Investigations, Congressman Emanuel Cleaver (D-MO), Chair of the Subcommittee on National Security, International Development and Monetary Policy, Congresswoman Joyce Beatty (D-OH), Chair of the Subcommittee on Diversity and Inclusion, Congressman Stephen Lynch (D-MA), Chair of the Task Force on Financial Technology, Congresswoman Alma Adams (D-NC), Congressman Jesús “Chuy” García (D-IL), Congresswoman Sylvia Garcia (D-TX), Congressman Vicente Gonzalez (D-TX), Congressman Josh Gottheimer (D-NJ), Congressman Al Lawson (D-FL), Congressman Dean Phillips (D-MN), Congresswoman Ayanna Pressley (D-MA), Congressman David Scott (D-GA), Congresswoman Rashida Tlaib (D-MI), and Congressman Juan Vargas (D-CA).
The legislation contains the following provisions:
- Supporting Minority CDFIs. This bill establishes a permanent set aside of 40 percent of CDFI Fund appropriations reserved for award, guarantee, and grant programs for minority lending institutions, and requires reporting on such activities. The bill also establishes a new Office of Minority Community Development Financial Institutions to administer these funds led by a new Deputy Director of Minority Community Development Financial Institutions.
- Emergency Funding to the CDFI Fund. This bill would allocate $5 billion to the CDFI Fund, with $2 billion (40 percent) reserved for minority CDFIs, utilizing existing funds provided under the CARES Act.
- Strengthening MDIs and Impact Banks. The bill strengthens MDIs, as well as “impact banks” that predominantly serve low-income borrowers, through partnerships, investments, technical assistance, and Federal government deposits.
- Expanding Opportunity for MDIs. The bill would codify the Financial Agent Mentor-Protégé Program within the Department of the Treasury. The program provides participating minority depository institutions and small financial institutions with mentorship opportunities with larger financial institutions.
- Capital Investments and Loans to CDFIs and MDIs. This bill directs the Department of Treasury to provide capital and interest-free loans to CDFIs, MDIs, impact banks, and credit unions who primarily serve low-income, underserved communities.
- Provides CDFIs Easier Access to Long-Term Financing. This bill temporarily lowers the minimum issuance amounts under the CDFI Bond Guarantee Program from $100 million to $25 million, and then revises it permanently to $50 million to support community development projects in low-income urban and rural communities.
See here for the bill text.
See here for a one pager.
See here for a section-by-section.
On October 22, 2019, the Subcommittee on Consumer Protection and Financial Institutions convened a hearing entitled, “An Examination of the Decline of Minority Depository Institutions and the Impact on Underserved Communities.”
On November 20, 2019, the Subcommittee on Consumer Protection and Financial Institutions convened a hearing entitled, “An Examination of Regulators’ Efforts to Preserve and Promote Minority Depository Institutions.”
On June 3, 2020, the Subcommittee on Consumer Protection and Financial Institutions convened a virtual hearing entitled, “Promoting Inclusive Lending During the Pandemic: Community Development Financial Institutions and Minority Depository Institutions.”
On July 9, 2020, the Subcommittee on Diversity and Inclusion convened a virtual hearing entitled, “Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and Financial Services During the Pandemic.”