While the American Bankers Association supports responsible stewardship of federal financial assistance, any changes to how that assistance is distributed should preserve the operational effectiveness of the Community Development Financial Institution Fund for financial institutions, ABA said in a letter to the Office of Management and Budget.
OMB is seeking to revise guidance for how federal agencies allocate financial assistance because that assistance has been used to promote “a ‘woke’ policy agenda that deliberately favored certain identity groups over others,” according to proposed rulemaking. In its letter, ABA said many CDFIs rely on programs administered by the CDFI Fund to expand access to capital and financial services in underserved communities.
“CDFIs operate within a comprehensive prudential supervisory framework and often have limited staff dedicated to grant administration,” ABA said. “As a result, changes that increase administrative complexity or create uncertainty in program administration may reduce participation in CDFI Fund programs and delay the deployment of capital into the communities these programs are intended to serve.”
Among other things, ABA said the OMB’s plan to eliminate the availability of fixed-amount awards could significantly increase the administrative burden for participating banks. The association also encouraged OMB to provide clear guidance regarding any circumstances under which awards may be modified or terminated.
“Greater predictability will enable participating institutions to make long-term commitments while continuing to meet the objectives of CDFI Fund programs,” ABA said.
