Legislators grill Bessent over government funding reductions for Community Development Financial Institutions
The Trump administration has proposed significant cuts to the Community Development Financial Institutions (CDFI) Fund in its budget plan for the next fiscal year (FY 2026). The proposed budget includes a rescission of $24 million, which represents about 86% of certain funds previously promised[1].
The White House budget requests approximately $33 million for administrative costs and a new initiative, a substantial decrease from the recent funding levels of around $324 million for FY 2025[4]. This proposal is met with contrast as the House Appropriations Committee’s draft FY 2026 bill proposes $276.6 million for the CDFI Fund, a significant increase compared to the Trump administration's proposal[2].
This move towards reduced funding for the CDFI Fund is part of a broader set of large funding decreases affecting rural counties and economic development programs, indicating a shift towards austerity in these areas[5].
The proposed cuts have sparked concern and opposition from various quarters. Bank trade groups have written to Congress urging support for the CDFI Fund, citing its public-private partnership model as aligning with the Trump administration's goals[3]. Republican Representative Al Green questioned the "woke" label in Trump's budget and asked if the CDFI fund's statutory function is to be "woke"[6].
Democratic Representative Maxine Waters mentioned securing $12 billion in capital investments and grants for CDFIs and minority depository institutions during her term with Steve Mnuchin as Treasury secretary[7]. This is a stark contrast to the proposed $100 million in the Trump administration's budget.
Despite the proposed cuts, there is bipartisan support among lawmakers for the importance of the CDFI fund in expanding financial access[8]. Treasury Secretary Scott Bessent confirmed that the CDFI fund is performing its statutory functions as required and denied the "woke" label[9].
In a positive development, Bessent also announced a new $100 million award program for CDFIs, focusing on providing affordable financing in rural America[10]. The new program requires 60% of CDFI loans and investments to go to rural areas.
This news comes after President Donald Trump issued an executive order in March targeting the CDFI fund for potential cuts as part of efforts to reduce the scope of the federal bureaucracy[11]. The final decision on the CDFI Fund's funding for FY 2026 is pending Congressional approval.
References: [1] [Link to source 1] [2] [Link to source 2] [3] [Link to source 3] [4] [Link to source 4] [5] [Link to source 5] [6] [Link to source 6] [7] [Link to source 7] [8] [Link to source 8] [9] [Link to source 9] [10] [Link to source 10] [11] [Link to source 11]
The proposed cuts to the Community Development Financial Institutions (CDFI) Fund in the Trump administration's FY 2026 budget plan raises concerns within the business, finance, and political arenas, as it is perceived as a shift towards austerity in economic development programs. This move has sparked opposition from various sectors, including bank trade groups, who argue that the CDFI Fund's public-private partnership model aligns with the administration's goals, while also emphasizing its importance in expanding financial access, a key aspect of general-news agendas.
