House Committee Cuts $45.4M From CDFI Fund; Senate Maintains Funding

How will credit unions be impacted by House and Senate Financial Services spending bills?

Demonstrating how difficult the annual appropriations process will be this year, the Senate Appropriations Committee on Thursday approved legislation that would provide $324 million for the CDFI program in FY24—$45.4 million more than the House Appropriations Committee approved the same day.

The Senate Appropriations Committee by voice vote approved an FY24 Financial Services spending bill that would provide the program with $324 million—the same amount the program received during the current fiscal year.

On the other side of the Capitol, the House Appropriations Committee approved a Financial Services spending bill that would provide $278.6 million for the program. 

The House vote was 34–26, with Democrats opposing the measure.

The House and Senate committee bills also call for $3.5 million for the NCUA CDRLF program—the same amount the program received this year and the same funding level it received in FY23.

What They’re Saying

Senate Appropriations Committee Chairwoman Sen. Patty Murray, D-Wash., said the appropriations bills her panel is considering conform to the agreement on funding levels contained in the debt ceiling deal reached between President Biden and House Speaker Kevin McCarthy, R-Calif.

The House, on the other hand, is considering bills containing spending cuts much larger than those included in the deal.

“The Senate is focused on bills that actually can be signed into law,” Murray said.

House Appropriations Committee ranking Democrat Rosa DeLauro, D-Conn., said the House Financial Services spending bill never would be signed by President Biden.

“Sadly, this is not a serious bill,” DeLauro said.

Concerns Laid Out in Accompanying Report

In cutting funding for the CDFI program, the House panel—in its Republican-written report accompanying the bill—expressed concern that the CDFI Fund has yet to award grants from its FY23 appropriations.

The GOP report also noted that the CDFI Fund is contemplating changes to the program.

“The Committee is concerned about proposed changes to the CDFI certification application that would result in many rural banks losing their CDFI status through stricter rules on interest rates, underwriting standards, risk management tools, disclosure requirements, and target markets,” the report states.

The document goes on to direct the CDFI Fund to report within 60 days of the bill’s enactment on the steps to consider public comments on the revised application.

Fund officials this week announced they will hold a meeting of its Community Development Advisory Committee on July 31 to receive recommendations from a subcommittee on the certification process.

What Else Does the House Legislation Cover?

The House bill and accompanying report also contain many policy riders favored by Republicans. Those riders would, among other things:

–Convert the CFPB into a five-member commission and subject the agency to the annual appropriations process. The bill calls for $635 million for the agency, which currently draws its funding from the Federal Reserve.

“The Committee’s experience overseeing the Federal Communications Commission, the Federal Trade Commission, the Securities and Exchange Commission, the Consumer Product Safety Commission, and other Federal agencies with powers to protect consumers and investors leads the Committee to conclude that a five-member commission is more suitable for guiding the CFPB than a single director,” the Republicans said.

–Prohibit the Financial Crimes Enforcement Network (FinCEN) from issuing beneficial ownership reporting rules that do not reflect congressional intent. Republicans have criticized the rules being proposed by FinCEN.

–Prohibit the CFPB from implementing its rule requiring financial institutions to report statistics regarding their lending to minority- and women-owned small businesses.

–Call on the U.S. Postal Services to end its pilot programs testing the cashing of business and payroll checks of up to $500 in exchange for gift cards. That program is currently being tested in four locations.

“The Committee strongly believes the pilot program should not be extended and the USPS should focus on its core mission of providing the nation with reliable, affordable, universal mail service,” the report reads.

What Comes Next?

The Senate has not yet released its version of the Financial Services spending bill or report, so it remains unclear whether appropriators attached policy riders to their version of the bill.

However, traditionally, senators generally have not attached many policy riders to their versions of spending bills.