2023 Policy Round-Up: Four Key Issues to Know
Read time: 4 minutes
From long-awaited CDFI certification updates to the uncertainty of federal budget appropriations, OFN is sharing a year-end update on the key policy issues affecting the industry
As 2023 draws to a close, we want to update members, partners, and allies on key policy issues that impact our industry and the clients and communities we serve. The latter part of the year included significant updates and changes (CRA and CDFI certification), but other issues remain unresolved. OFN will continue to advocate for our policy priorities.
Here’s what you need to know.
CDFI Certification Update Is Here!
What it is
Certification ensures that CDFIs operate with a community development mission and provide responsible financial products to communities inadequately served by mainstream banks. Updates to this key industry certification have been under review by the CDFI Fund since 2017, and earlier this month, the Fund released the updated application.
Why it matters
CDFIs are powerful players in the financial system, attracting significant public and private investment. Yet our key certification has not been updated since the 1990s. A modernized certification is necessary to protect the CDFI brand and our communities. These reforms will impact everyone in the industry, and OFN will support our members to understand and respond to the revised application.
Read the Update: OFN’s First Look at the CDFI Certification Updates
Federal Funding for CDFIs in Flux
What is it
Three months into fiscal year 2024, the federal government is still operating without a budget. In October, lawmakers passed a bill to maintain current federal funding levels and keep the government open, but CDFI Fund appropriations are unresolved and under threat. There’s a lot of daylight between the House and Senate funding proposals: $278 million and $334 million, respectively.
Why it matters
OFN’s goal is $1 billion in grant funding for CDFIs across the federal government. Maximizing appropriations for the CDFI Fund is the best way to strengthen and scale the CDFI industry, but some lawmakers want to defund it. As we head into an election year without a finalized budget, to say there’s uncertainty would be an understatement.
Read the Update: With the Latest Continuing Resolution, Threats to CDFI Funding Remain
Landmark Civil Rights Legislation Gets an Update
What is it
In October, federal bank regulators announced new rules to strengthen and modernize implementation of the Community Reinvestment Act (CRA), a landmark law enacted nearly in 1977 to encourage banks to serve the credit needs of their entire communities, including low-income areas.
Why it matters
For the past five years, OFN has worked with members and partners to advocate for CRA reforms that support the industry. The new rule will shape the way capital flows to the communities served by CDFIs for decades to come. We continue to dig into the 1500-page rule, but note some hits and some misses in the new rule.
Read the Update: OFN’s First Look at the New Community Reinvestment Act Rule
Courts and Congress Fight Small Business Lending Rule
What is it
The Consumer Finance Protection Bureau’s Section 1071 rule requires small business lenders to collect and report demographic data of borrowers. It’s being challenged in federal court and in Congress, with the House voting recently to nullify the rule. The administration says they will veto the resolution.
Why it matters
Collecting and reporting on geographic, demographic, and other data about small business loan applications is a big win for transparency, and OFN supports implementing the rule. Similar reporting has been required of mortgage lenders for decades, so it’s not without precedent. In addition to helping to enforce fair lending laws, the data can be used to better identify the credit needs of very small, rural, and underserved businesses that CDFIs often support.
Read the Update: Congress Opposes Small Business Lending Data Collection Rule
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