The American Bankers Assocaition raised concerns today regarding documentation for the Treasury Department’s Emergency Capital Investment Program, a program aimed at helping community development financial institutions and minority depository institutions support access to capital in underserved communities. The program provides CDFIs and MDIs direct capital for loans, grants, and forbearance for small businesses, minority-owned businesses, and those disproportionately impacted by COVID-19.
In a letter to Treasury Secretary Janet Yellen, the association said it had concerns about the terms of the program. Specifically, the association flagged a lack of adequate cure periods and similar options to address noncompliance with program documents, including for the loss of CDFI status following an ECIP investment. ABA also raised concerns about the requirement for rigid adherence to the institution’s investment and lending plan that “has no apparent tolerance for subsequent changed circumstances, including those beyond the institution’s control.”
Other problems with the program that ABA highlighted include the lack of appropriate protections in the event that Treasury exercises its right to appoint board observers, and restrictions on transfers of the Treasury’s interests and exceptions for circumstances when those restrictions would not apply.