Crapo, Warner Reintroduce Legislation to Support Community Development Financial Institutions

Washington, D.C.--U.S. Senators Mike Crapo (R-Idaho) and Mark R. Warner (D-Virginia), Co-Chairs of the Senate Community Development Finance Caucus, reintroduced the Scaling Community Lenders Act, bipartisan legislation to unlock more sources of liquidity and support for Community Development Financial Institutions (CDFIs).  The legislation would allow CDFIs to scale their activities and fuel more lending in low- and moderate-income (LMI) communities.

“I am proud to support the Scaling Community Lenders Act, which will help provide access to capital in low-income, rural and underserved communities,” said Crapo.  “CDFIs play an important role in our state and nationwide, and this bill will help them expand their lending activities.”

“CDFIs can play a crucial role in driving economic growth and providing access to capital to underserved communities,” said Warner.   “I’m pleased to reintroduce this legislation to that supports new and innovative approaches in the industry and lays the groundwork for new ways to meet the needs in LMI communities.”

CDFIs play a critical role in providing responsible and affordable credit to underserved communities.  While Congress has taken significant steps to support community-based lenders since the onset of the COVID-19 pandemic, CDFIs continue to require more long-term patient capital, operating capital, and resources to modernize their systems and compete in an era of rapid financial innovation.  The Scaling Community Lenders Act would authorize new resources to activate and fund the long-dormant Section 113 of the Riegle Act of 1994-- the CDFI liquidity enhancement program--allowing the CDFI Fund to finance projects within the industry, selected on a competitive basis, to provide liquidity to CDFIs.

CDFIs lend across a variety of categories, including business loans, consumer loans, commercial real estate, residential real estate, home improvement and home purchases. However, for many of these products, there is no secondary market that can unlock capacity and take loans of CDFI balance sheets.  The development of a secondary market or facility that would buy loans from CDFIs would allow the industry to prove the performance of their assets in the long-term.  The Scaling Community Lenders Act would encourage innovation and help determine the best routes for unlocking secondary markets for CDFIs.

Crapo and Warner have long been supporters of CDFIs and MDIs.  Last year, the Senators launched the bipartisan Senate Community Development Finance Caucus to serve as a platform where policymakers can coordinate and expand on public and private-sector efforts in support of the missions of CDFIs and Minority Depository Institutions.

Bill text is available here.