Congresswoman Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, announced the reintroduction of H.R. 9767, the “Promoting and Advancing Communities of Color Through Inclusive Lending Act” to support minority depository institutions (MDIs) and community development financial institutions (CDFIs) in honor of the 30th anniversary of the creation of the CDFI Fund. This legislation builds on the committee’s work to support CDFIs and MDIs and authorizes $4 billion in additional capital, grants, technology support and other reforms to increase affordable lending in minority communities, including to small businesses and minority-owned businesses.

This bill will:

• Strengthen diverse and mission-driven community financial institutions – According to the bill, “the Fund shall reserve 40 percent of such assistance for minority lending institutions.”
• Establish the Office of Diverse and Mission-Driven Community Financial Institutions – This office will have the authority to “monitor and issue reports regarding (i) [CDFIs], [MDIs] and minority lending institutions; and (ii) the role such institutions play in the financial system … including the impact they have on providing low- and moderate-income communities, communities of color and other underserved communities.”
• Support capital investments, grants and technology for MDIs and CDFIs – There will be a study on “technology challenges impacting [MDIs] and [CDFIs] with respect to (i) internal technology capability and capacity of the institutions to process loan applications … (ii) and otherwise serve current and potential customers through the internet, mobile phone applications and other tools; (iii) cybersecurity; and (iv) challenges and solutions related to algorithmic bias in the deployment of technology.” MDIs and CDFIs awarded a grant may use the funds to “enhance or adopt technologies that (I) shorten loan approval processes; (II) improve customer experience; (III) provide additional services to customers; (IV) facilitate compliance with applicable laws, regulations and program requirements … (V) help ensure privacy of consumer records and cybersecurity resilience.”
• Create a new young entrepreneurs’ program at the CDFI Fund to acquire the start-up capital needed to start a small business.
• Require Treasury to provide an interactive, searchable map of MDIs and CDFIs that shows the geographic locations of their headquarters and branch locations.
• Codify an annual report on certified CDFIs regarding the impact various types of CDFIs have on different communities.
• Require the CDFI Fund to periodically consult with federal banking agencies and the Consumer Financial Protection Bureau, regarding applying and certified CDFIs they regulate.
• Ensure MDIs and CDFIs have access to the Fed’s discount window.
• Require a Treasury study on the use of securitization by CDFIs.

“CDFIs and MDIs are critical lifelines for underserved communities, often stepping in to provide financial products and services for these communities who have been historically and systemically shut out from access to traditional banking services,” Waters said. “While Committee Democrats have made major progress to support MDIs and CDFIs in recent years, we must build on this success by advancing additional resources and reforms to bolster these diverse and mission-driven community financial institutions. That’s why I am pleased to reintroduce this critical piece of legislation on the 30th anniversary of the CDFI Fund, which if passed, will ensure these institutions can continue their mission to provide communities with affordable and fair financial services and access to credit, and aid Congress in the effort to reverse decades of exclusion and discrimination in the banking system.”