Bill Overview
Title: CDFI Bond Guarantee Program Improvement Act of 2022
Description: This bill reauthorizes for four years and otherwise revises the Community Development Financial Institutions (CDFI) Bond Guarantee Program. Specifically, the bill (1) reduces the CDFI Bond Guarantee Program minimum issuance amount from $100 million to $25 million, and (2) revises the amount to be held in a CDFI's relending account. (CDFIs are financial institutions serving low-income communities. Designation as a CDFI allows an institution to participate in programs such as the CDFI Bond Guarantee Program. The program provides financing to CDFIs through federal credit subsidies that allow CDFIs to issue bonds.)
Sponsors: Rep. Cleaver, Emanuel [D-MO-5]
Target Audience
Population: People in low-income or disadvantaged communities served by CDFIs globally
Estimated Size: 20000000
- CDFIs are financial institutions that operate with the primary aim of serving low-income communities.
- The main beneficiaries of the funds from CDFIs are individuals and businesses located in low-income or disadvantaged areas.
- CDFIs directly serve underserved populations, often helping those who might not qualify for loans from traditional financial institutions.
- The legislation lowers the minimum bond issuance to $25 million, allowing smaller CDFIs to participate, potentially increasing the reach to more communities.
Reasoning
- CDFIs are particularly active in financing projects in low-income communities, targeting both individuals and small businesses that may struggle to get financing through traditional banks.
- Lowering the bond guarantee threshold to $25 million allows smaller and potentially more numerous CDFIs to participate, increasing access and distribution of financial support.
- Although these improvements can potentially increase the reach and effectiveness of the CDFI programs, they remain restricted by budget limits and the specific targeting of defined low-income or disadvantaged communities.
- The wellbeing scores are based on personal and community financial improvements over 1, 2, 3, 5, 10, and 20 years post policy implementation compared to the scenario where the program is not improved.
Simulated Interviews
Small Business Owner (Memphis, TN)
Age: 45 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- The policy could help me secure needed financing to expand my business.
- With better access to financial support, I can offer more jobs in the community.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 6 |
Nonprofit Worker (Los Angeles, CA)
Age: 34 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- Access to more funding means we can help more individuals improve their financial standing.
- This could lead to more community outreach and financial education programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
High School Teacher (Detroit, MI)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 14/20
Statement of Opinion:
- More CDFI funding could lead to better community projects or resources for our students.
- It's essential for community development and relief in financially strapped areas.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 8 | 6 |
Community Organizer (New Orleans, LA)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Reducing the bond threshold could rejuvenate urban development projects.
- More engagement with CDFIs may boost overall economic vibrancy in struggling areas.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freelance Graphic Designer (Phoenix, AZ)
Age: 40 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- Any extra support to local businesses would translate to more opportunities for freelancers like me.
- I think this policy might indirectly benefit me by bolstering the local economy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Local Government Officer (Chicago, IL)
Age: 46 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 8.0 years
Commonness: 10/20
Statement of Opinion:
- There are potential improvements in community financial health with better-funded local CDFIs.
- Streamlining the bond guarantee process can facilitate needed investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Retired (Miami, FL)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 12.0 years
Commonness: 16/20
Statement of Opinion:
- I support anything that boosts local businesses and facilities, as it directly affects our community well-being.
- Investment in the area historically improved local life quality.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 7 |
Student (Newark, NJ)
Age: 29 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 6.0 years
Commonness: 15/20
Statement of Opinion:
- More CDFI engagement could mean more job opportunities or student support services.
- It could ease financial struggles if local businesses thrive and hire.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Tech Start-Up Employee (San Francisco, CA)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- This policy may not have a direct effect, but indirect community improvements help build a better environment.
- Elevating economic status in the area can foster better partnerships and innovation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Restaurant Owner (Boston, MA)
Age: 60 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- Greater financial access can stimulate local businesses like mine.
- Making CDFIs more manageable to access would ensure stability for small enterprises.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 6 |
Cost Estimates
Year 1: $75000000 (Low: $50000000, High: $100000000)
Year 2: $80000000 (Low: $55000000, High: $105000000)
Year 3: $85000000 (Low: $60000000, High: $110000000)
Year 5: $95000000 (Low: $70000000, High: $120000000)
Year 10: $115000000 (Low: $85000000, High: $145000000)
Year 100: $300000000 (Low: $250000000, High: $350000000)
Key Considerations
- The reauthorization is permanent, making the cost and fiscal impacts indefinite.
- The reduction in the minimum bond issuance encourages more participation but also raises potential exposure and costs.
- The communities served by CDFIs typically have limited access to traditional forms of credit, which this policy helps to mitigate.
- There is a wide range in cost estimates due to the variability in how many smaller CDFIs will participate.