Saying that the economic impact of the coronavirus pandemic crisis has hit low-income and minority neighborhoods the hardest, Senate Democrats Tuesday proposed using Community Development Financial Institutions to funnel billions of dollars into those areas.
“The Jobs and Neighborhood Investment Act directs billions in new investments to help low- income and minority communities withstand this unprecedented economic downturn and emerge stronger with increased access to capital and new economic opportunities,” said Sen. Mark Warner (D-Va.), one of the primary sponsors of the legislation.
Rep. Gregory Meeks (D-N.Y.) is sponsoring a House companion to Warner’s legislation.
The legislation comes as Congress and the Trump Administration struggle to write another pandemic economic recovery bill. Myriad proposals are being circulated, with the administration pushing for a payroll tax cut and Senate Republicans saying they want companies that comply with safety rules to be given immunity from liability if a customer or worker contracts COVID-19.
The Trump Administration has proposed eliminating the CDFI program in each of its budgets, but the program has strong support on Capitol Hill. In addition, the pandemic recovery bills already enacted have provided set-asides for CDFI lending.
That must continue, Democrats said, as they unveiled the bill.
“If our Republicans colleagues are serious about addressing inequity and getting aid to those who need it most, they should stop focusing on providing immunity to big corporations and make sure our truly small and minority owned businesses, and the institutions that truly seek to serve them, have access to the resources and funding they need to survive and thrive,” said Senate Minority Leader Chuck Schumer (D-N.Y.), another sponsor of the measure.
Among other things, the legislation would provide at least $7 billion for a new program aimed at building capital in eligible CDFIs and Minority Depository Institutions.
The bill also would set aside an additional $2.9 billion for the CDFI Fund. That boost would include $1 billion for pandemic recovery efforts, $1 billion to provide grants to CDFIs to expand lending and $400 million for technical assistance grants.
The trade group representing community development credit unions endorsed the bill. “The current global pandemic has made plain that our financial system is stronger and more dynamic when community development financial institutions grow and thrive,” said Cathie Mahon, president/CEO of Inclusiv, the organization representing those credit unions.