The American Bankers Association today expressed support for a proposed bill to create a tax credit for investments in community development financial institutions and minority depository institutions. In a statement to the Senate Banking Subcommittee on Housing, Transportation and Community Development, ABA said the Community Development Investment Tax Credit Act could address issues of economic inequality, access to financial resources and economic revitalization in underserved communities. The subcommittee held a hearing today on CDFIs.
“By providing tax incentives for investments in CDFIs and MDIs, it encourages the flow of capital into these vital institutions, stimulating local economies, creating jobs and empowering disadvantaged individuals and businesses,” ABA said.
ABA also raised concerns about proposed revisions to the CDFI certification application, which the association said could have negative effects on rural banks. The association said that while it supports the goal of preventing certification from applying to entities that do not align with the CDFI Fund’s mission, a “balanced calibration” of certification standards would be a better approach. “Given that local banks play a pivotal role in community development by offering a comprehensive range of financial products and services while also contributing nonbanking benefits tied to community involvement, it is incredibly important that revisions to the CDFI certification standard take into account the different business models of depository CDFIs and CDFI loan funds, and endeavor to maintain the diversity of the current CDFI marketplace,” ABA said.
