WASHINGTON — During testimony before the Senate on Wednesday, Treasury Secretary Scott Bessent told lawmakers the Community Development Financial Institutions Fund had “lost its way,” a characterization that drew immediate bipartisan pushback during a Senate hearing on the administration’s budget and its proposed cuts to the program.
Testifying before a Senate Appropriations subcommittee, Bessent defended the administration’s plan to significantly reduce funding for CDFIs, according to American Banker. Bessent said the program had shifted toward “a partisan agenda,” adding that “part of the CDFI program had lost its way.”
As the CU Daily has been reporting, the Trump administration has on multiple occasions sought to zero-out the fund, and eliminate staff at Treasury responsible for administering CDFI grants. It has also delayed disbursal of funds that have already been approved, and most recently has proposed reducing its funding levels, even though Congress has restored full funding.
Bessent’s remarks came in response to questioning from Sen. Chris Coons (D-DE), who challenged the administration’s proposal to cut more than $200 million—over 60%—from the fund in fiscal 2027. Bessent said the administration supports refocusing remaining funding on rural lending initiatives, including a proposed $100 million rural program, according to American Banker.
Bipartisan Pushback
According to the report, lawmakers from both parties pushed back on Bessent’s assessment, pointing to the program’s longstanding role in supporting small businesses and economic development in underserved areas. Sen. Deb Fischer R-NE) cited the impact of CDFIs in her state, including financing for rural businesses, housing and community services, according to American Banker.
Bessent also argued during the hearing that reforms are needed to ensure the program is free from “waste, fraud and abuse,” while emphasizing a narrower focus on economic development in rural communities, American Banker added.
The debate comes as lawmakers continue to scrutinize
