Washington, D.C. (Dec. 20, 2022) — The Independent Community Bankers of America (ICBA) and other groups today requested a meeting with members of Congress to discuss a Treasury Department proposal that would irreversibly harm access to services provided by Community Development Financial Institutions Fund-certified depository institutions.
“ICBA and the nation’s community banks wholeheartedly support the Community Development Financial Institutions Fund and have serious concerns with the Treasury Department’s plan to drastically change eligibility standards, threatening the ability of CDFI community banks to meet the needs of their local communities,” ICBA President and CEO Rebeca Romero Rainey said today. “With CDFI community banks specializing in promoting access to financial services in low-income communities, we hope Congress will help address these concerns to avoid unintended consequences on local consumers and small businesses.”
In a joint letter to the House and Senate, the groups expressed grave concerns with proposed updates to the CDFI Fund’s certification application and guidance. The proposal would rescind CDFI certification for depository institutions that offer certain loan features, such as balloon mortgages, designed to meet the unique needs of their customers, such as those with low or moderate incomes and those who live in rural areas.
Further, the changes could upend the Biden administration’s plans to infuse more than $8 billion into distressed communities through the Emergency Capital Investment Program. As ICBA detailed in a separate comment letter to Treasury and during a recent congressional briefing featuring Robbie Barnes, president and CEO of PriorityOne Bank in Magee, Miss., CDFIs that lose their certification due to the changes contemplated by the CDFI Fund could be required to return ECIP funds to Treasury—undermining the program’s purpose of augmenting the support low- and moderate-income community financial institutions provide to local consumers and small businesses.
The groups also are concerned that the CDFI Fund’s release of the application updates under the Paperwork Reduction Act was procedurally inappropriate and did not allow for sufficient consideration of stakeholder feedback. Instituting major CDFI Fund policy changes that will take effect in April goes well beyond simple information collection and requires a formal rulemaking process with adequate opportunity for public comment, as required by the Administrative Procedures Act, the groups said.
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.
With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5.8 trillion in assets, over $4.8 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.