Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following statement at a full Committee hearing entitled, “An Unprecedented Investment for Historic Results: How Federal Support for MDIs and CDFIs Have Launched a New Era for Disadvantaged Communities.”
Minority depository institutions, or MDIs, and community development financial institutions, or CDFIs, are lifelines to our communities. According to the latest data, there are 146 MDI banks, 518 MDI credit unions, and 1,333 CDFIs, including nearly 600 non-depository loan funds. At a time when the pandemic placed many businesses owned by people of color at the brink of closing or permanently being closed down, MDIs and CDFIs jumped into action and provided much needed support and relief. When millions of Black and Latino Americans found themselves shut out of traditional financial institutions, CDFIs and MDIs provided fundamental support to the long-term financial well-being of many.
For that reason, I worked with Representative Velázquez, who is also the Chairwoman of the Small Business Committee, to secure $60 billion in PPP funding for community financial institutions, including MDIs and CDFIs, to ensure relief reached underserved and minority-owned businesses after the largest banks ignored them. Several Committee colleagues, including Representatives Meeks, Beatty, and Green, drafted legislation to support MDIs and CDFIs, and I worked with Ranking Member McHenry and our Senate counterparts, as well as Senator Warner, to include key provisions of my comprehensive bill, the “Promoting and Advancing Communities of Color Through Inclusive Lending Act,” in the COVID-19 relief package passed in December 2020. Specifically, the bill included an unprecedented $12 billion in capital investments and grants to strengthen MDIs and CDFIs and help them reach underserved communities. Additionally, the private sector, including megabanks have made a lot of promises to address racial inequality and support MDIs and CDFIs the last few years, so we’ve invited megabank CEOs to testify, and we will continue to monitor their efforts to fulfill their commitments.
The impact of our support for CDFIs and MDIs has reached communities across this country. For example, in 2020, CDFIs provided loans and investments to more than 162,000 businesses and nearly 4 million consumers. They financed 50,000 affordable housing units, and hundreds of grocery stores, markets, and fresh food projects. While our work has provided some success, we should bear in mind the number of MDIs has declined by about a third in the decade following the 2008 financial crisis, with the number of Black banks declining by half. Also, MDIs and CDFIs face barriers to adapting to changes in the financial services marketplace and accessing opportunities to meet the unprecedented needs of communities in this pandemic. What’s more, the $9 billion Emergency Capital Investment Program was oversubscribed by $4 billion in funding requests that will go unmet, suggesting that Congress should provide more support.
And so, I look forward to hearing from our witnesses on these issues and learning what additional steps we can take to further support CDFIs and MDIs, and in doing so, strengthening our Black and Latinx communities.