Bill Overview
Title: CDFI Bond Guarantee Program Improvement Act of 2022
Description: This bill permanently reauthorizes 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) reduces the amount allowed 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: Sen. Smith, Tina [D-MN]
Target Audience
Population: People who reside in low-income and underserved communities served by CDFIs
Estimated Size: 30000000
- The CDFI Bond Guarantee Program is focused on financial institutions that work with low-income communities.
- This bill will reduce the minimum bond issuance amount, which could allow smaller CDFIs to participate, potentially impacting more communities.
- CDFIs serve low-income individuals, who often lack access to traditional financial services.
- There are nearly 1,300 CDFIs across the United States as of 2021, with an increasing number worldwide.
- Many CDFIs focus on urban areas, but a significant number also serve rural and underserved communities globally.
Reasoning
- The CDFI Bond Guarantee Program is focused on financial institutions that work with low-income communities. This policy will likely impact individuals who rely on these institutions for financial services, such as small business loans, affordable housing financing, and personal financial supports.
- Reducing the bond issuance minimum allows smaller CDFIs to join the program, potentially expanding services to additional low-income areas or enhancing the depth of current services. This could positively impact the Cantril wellbeing scores for people relying on these services as they would likely have better access to financial resources.
- The population served by CDFIs includes a mix of urban and rural residents, with a wide range of financial needs, hence the interviews should reflect diverse settings to gauge the potential impact of the policy.
- Considering the budget limitations, the early years of the policy might not see a widespread impact until more capital becomes available, thus immediate shifts in wellbeing scores may be modest.
- Though focus is often on low-income groups, not all members of these communities are assisted by CDFIs, hence the impact of the policy might range from none to high, depending on how reliant individuals are on CDFI services.
Simulated Interviews
Small business owner (Cleveland, OH)
Age: 34 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I think the policy will allow more businesses like mine to get the financial help they need.
- There's a constant struggle to access traditional banking services, so CDFIs are essential.
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 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Teacher (Rural Alabama)
Age: 28 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- Improving the CDFI program means better facilities and housing for my community.
- Our community struggles to attract investment, so this could make a real difference.
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 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Community organizer (Los Angeles, CA)
Age: 50 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 5/20
Statement of Opinion:
- This policy could be a game-changer for many people we support in terms of housing and business.
- The access to lower bond thresholds will help smaller CDFIs that serve our areas.
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 | 6 | 6 |
Retail worker (Detroit, MI)
Age: 42 | Gender: female
Wellbeing Before Policy: 3
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- If more CDFI services become available to me, I could escape the cycle of high-interest loans.
- It’s a beacon of hope for people in my situation if access opens up.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 3 |
| Year 2 | 5 | 3 |
| Year 3 | 6 | 3 |
| Year 5 | 6 | 3 |
| Year 10 | 7 | 3 |
| Year 20 | 5 | 3 |
Retired (New York, NY)
Age: 63 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- I’ve seen how these programs can uplift entire blocks with new housing projects.
- This policy may mean more stability for future low-income housing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Freelancer (Phoenix, AZ)
Age: 29 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 4.0 years
Commonness: 6/20
Statement of Opinion:
- With more funds for CDFIs, I might get better rates to help manage my income instability.
- The policy can support better financial products for freelancers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
College student (Jackson, MS)
Age: 23 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- Getting more support from CDFIs could help students like me plan for the future.
- Financial education is key, and this can improve access.
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 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 6 |
Non-profit worker (Chicago, IL)
Age: 31 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 10/20
Statement of Opinion:
- Our programs are often limited by funding, so this policy can inject vital resources.
- Local nonprofits can be vital partners with CDFIs if well-funded.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 7 |
Entrepreneur (San Francisco, CA)
Age: 47 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- The lowered thresholds mean more access to necessary capital for businesses like mine.
- CDFIs do more than just provide loans; they are bridges to the future.
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 | 7 | 6 |
Social worker (Baltimore, MD)
Age: 38 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 9/20
Statement of Opinion:
- More CDFIs active can mean more personalized financial assistance for families I support.
- Anything that enhances CDFI capacity will have lasting impacts.
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 | 6 | 5 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $70000000)
Year 2: $52000000 (Low: $32000000, High: $74000000)
Year 3: $54000000 (Low: $34000000, High: $78000000)
Year 5: $58000000 (Low: $36000000, High: $82000000)
Year 10: $64000000 (Low: $40000000, High: $90000000)
Year 100: $105000000 (Low: $65000000, High: $145000000)
Key Considerations
- Increased bond issuances at lower thresholds could amplify the scale of financial services CDFIs provide to underserved communities.
- CDFIs help improve local economies through financing businesses, housing, and consumer financial services, which could multiply benefits.
- The policy's benefit hinges on the effectiveness and financial health of smaller CDFIs that may now qualify.
- There might be increased administrative and monitoring costs due to more participants in the program.