To amend the Community Development Banking and Financial Institutions Act of 1994 to provide for capitalization assistance to enhance liquidity.
Summary
S. 2718, the bill "To amend the Community Development Banking and Financial Institutions Act of 1994 to provide for capitalization assistance to enhance liquidity," aims to bolster community development financial institutions (CDFIs) by increasing their access to capital. The bill allows the Community Development Financial Institutions Fund (the Fund) to provide more assistance to organizations that purchase loans from CDFIs or provide credit enhancements. It also increases the amount of funds that can be awarded and modifies the use of funds received by the Secretary of the Treasury.
Expected Effects
The bill is likely to increase the liquidity of CDFIs, enabling them to expand their lending activities in underserved communities. This could lead to increased investment in affordable housing, small businesses, and other community development projects. The changes aim to provide CDFIs with greater financial stability and capacity to serve their target populations.
Potential Benefits
- Increased lending to underserved communities.
- Greater financial stability for CDFIs.
- Expanded investment in affordable housing and small businesses.
- Enhanced community development projects.
- Prioritization of organizations supporting CDFIs with broad geographic coverage.
Potential Disadvantages
- Potential for mismanagement of funds by recipient organizations.
- Risk of funds not reaching the intended beneficiaries.
- Increased regulatory burden on the Secretary of the Treasury.
- Possible unintended consequences from waiving certain requirements.
- The prioritization criteria, while beneficial, could inadvertently exclude some deserving organizations.
Constitutional Alignment
The bill appears to align with the Constitution's general welfare clause (Preamble). Congress has the power to regulate commerce and provide for the general welfare, which includes supporting financial institutions that serve communities in need. The bill does not appear to infringe on any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).