Treasury report praises CDFI program that Trump would cut
WASHINGTON — A report quietly released by the Treasury Department last week supports the performance of the Bank Enterprise Award program, saying there is “clear evidence” it helps recipients provide financial services to the most underserved communities.
But the White House has proposed to cut the BEA program — along with the rest of the Community Development Financial Institution programs operated by the Treasury — because it argued that they have achieved their goals and outlived their purpose.
The report, which was initiated under the Obama administration but published June 1, set out in part to determine the extent to which the aims of the BEA program were already being met by banks’ Community Reinvestment Act obligations. Earlier reports, by the White House Office of Management and Budget in 2002 and the Government Accountability Office in 2006, sought to examine the efficacy of the program.
The result was that there was "clear evidence" the program made it possible for participating banks to lend to exceptionally distressed communities in a way that would not be possible with CRA obligations. The report examined the program's administrative history as well as took stock of interviews and surveys with program applicants and recipients.
“The analysis of the BEA Program’s administrative and secondary data provides considerable evidence that the BEA Program is not duplicative of the CRA requirements,” the report says. “BEA Program awardees serve more highly distressed areas that have less access to bank branches and services than CRA reporting banks.”
The report went on to say that the majority of the program’s recipients “viewed the BEA Program as a tool that allowed more investment into areas where, regardless of CRA, they may have severely curtailed activity or had no activity at all.”
Those findings run counter to the White House’s rationale for cutting the program in its 2018 proposed budget. The White House said that because there are more than 1,000 CDFI banks in the U.S., there is no longer any need to administer the $210 million in grants managed by the Treasury’s CDFI Office.
“The CDFI Fund provides grants, loans, and tax credits to a national network of CDFIs to expand the availability of credit, investment capital, and financial services for low-income and underserved people and communities,” the budget said. “Today, with nearly 1,100 Treasury-certified CDFIs … that goal has been achieved.”
Jeannine Jacokes, chief executive and policy adviser for the Community Development Bankers Association, said she does not believe the report will change the administration’s position about the efficacy of the BEA program or CDFIs in general. But it may help demonstrate the value of the program to members of Congress, who managed to boost funding for the program in the 2017 omnibus spending bill even as President Trump was planning to eliminate it immediately.
“It strengthens the case for maintaining funding for the program,” Jacokes said. “It comes out and basically says, ‘Yes, this does direct banks to do the stuff that’s really, really hard.’ ”