Cdfi Bond Guarantee Program Improvement Act of 2022

Floor Speech

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Mr. CLEAVER. Mr. Speaker, I thank Chairwoman Waters for her longstanding support of CDFIs.

I speak today in support of my bill, the CDFI Bond Guarantee Program Improvement Act of 2022, which would open up a significant source of long-term, low-cost capital to support CDFI projects in low-income urban, rural, and indigenous areas of the country.

Community development financial institutions, CDFIs, deliver critical lending opportunities to low- and moderate-income communities and communities of color. CDFIs are banks, credit unions, and other financial institutions that provide products and services specifically aimed at the needs of low-income and marginalized communities and are certified by the CDFI fund, which is operated by the United States Department of the Treasury.

CDFIs support people and businessowners in underserved communities by providing affordable capital to communities typically excluded from the mainstream financial system. According to Treasury, in 2019, 33 percent of CDFI lending was in high poverty areas, nearly 75 percent of lending was to underserved populations and distressed areas, and 17 percent was to rural areas. I think that ought to make all the people committed to this concept of everybody participating quite happy.

CDFIs in my district, including Central Bank of Kansas City, LISC of Greater Kansas City, AltCap, and others, are instrumental in the effort to narrow the racial wealth gap and increase financial opportunities in underserved communities. However, we know that the high demand for CDFI services far exceeds available funding.

One tool the Federal Government has to support CDFIs in their mission is by making significant capital for economic development available to CDFIs through the bond guarantee program. Enacted through the Small Business Administration, the CDFI bond guarantee program is administered by Treasury, which guarantees bonds issued by qualified issuers and injects new and substantial capital into our Nation's most distressed communities.

Unlike CDFI fund programs, the bond guarantee program does not offer grants or direct loans but is instead a Federal credit subsidy that is designed to be repaid and function at no cost to the taxpayers.

Since inception, the bond guarantee program has guaranteed over $1.7 billion in bonds used to finance schools, not-for-profit facilities, small businesses, healthcare facilities, and commercial and residential real estate, among others.

My bill, H.R. 7733, endorsed by the CDFI Coalition, Community Reinvestment Fund, Opportunity Finance Network, and others, would recognize and reauthorize this program.

The bill was a bipartisan effort and unanimously voted out of our committee. Mr. Speaker, I thank Chairwoman Waters, Ranking Member McHenry, and my colleagues for partnership on this legislation, and I urge swift passage today.

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