Sen. Brian Schatz (D-Hawaii) introduced a bill Tuesday that would create a $2 billion Community Development Institutions (CDFI) crisis fund to help with pandemic recovery. CUNA President/CEO Jim Nussle expressed support for the bill, which is co-sponsored by Sens. Tammy Baldwin (D-Wis.), Chris Van Hollen (D-Md.), Kirsten Gillibrand (D-N.Y.), Ron Wyden (D-Ore.), Elizabeth Warren (D-Mass.), Dianne Feinstein (D-Calif.), Richard Blumenthal (D-Conn.), Bernie Sanders (I-Vt.), and Martin Heinrich (D-N.M.).
“The pandemic and ensuing economic crisis has had a disproportionate impact on vulnerable communities and the policy response needs to recognize that more needs to be done to help these communities recover,” Nussle said. “Sen. Schatz’s legislation to create a CDFI Crisis Fund will ensure that CDFI credit unions can get much needed resources to our most vulnerable communities, reducing the pain experienced as the result of any number of disasters.”
The bill’s $2 billion CDFI Crisis Fund would serve as a complement to the Treasury’s CDFI Fund. It would be refilled as funds are deployed each year, and can be activated nationally or state-wide through two automatic triggers:
For economic crisis: An increase in the state’s six-month moving average of the national unemployment rate (or if nationally, three-month moving average) by 0.50 percentage points or more relative to its low during the previous 12 months; or
For natural disasters, a Stafford Act major disaster declaration where the Individual Assistance Program is activated. Funds are available state-wide if a majority of residents live in a declared county, or for affected county use otherwise.
All CDFIs can apply for grants up to 10% of the total fund amount, based on the institution’s capacity once the fund is activated
The CDFI has to commit to spending the funds with 90% of the funds are to be spent in the affected area through usual financial products and services that CDFIs offer. Of the funds that the CDFI invests in the affected area 25% are for very low-income communities, including 15% percent for extremely low-income communities.
It also sets aside 30% of crisis funds for minority CDFIs, including 10 percent for Native American CDFIs and sets aside 20% of the Crisis Fund for annual resilience grants to be administered alongside the CDFI Fund’s other programs.
As of July 13, there are 331 CDFI certified credit unions nationwide.
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