Graham Steele, the Assistant Secretary for Financial Institutions at the U.S. Department of Treasury, recently provided an analysis on how the Treasury has approached equitable community finance over the past few years. The field of community finance has undergone rapid transformation due to policies that have supported equitable economic growth.
A press release by the Department of Treasury highlighted that this transformation has also been propelled by the historic scale of federal investments placed into the sector. These investments have unlocked new opportunities for economic potential in various sectors across the country, particularly in geographic areas of underserved communities. Steele pointed out that one of the treasury's targets has been to enhance economic productivity by addressing inequality nationwide. By investing in those with a lack of resources, more opportunities for growth are created, leading to a positive impact on the overall economy of the United States.
Steele identified two key drivers in implementing this goal: The Emergency Capital Investment Program (ECIP) and Community Development Financial Institutions (CDFI) funds. Over $8.5 billion has been invested in ECIP, enabling 175 community financial institutions which support lending to small business owners and consumers in low-income communities. The CDFI Fund has delivered $3 billion in funding through various programs. Since 2021, it has made $15 billion in tax credit allocations under the New Markets Tax Credit Program and made $1.4 billion in grants available through the Financial Assistance Program.
According to Steele, the approach taken by the Treasury to support low-income communities has advanced broad-based equitable growth. Six principles served as a foundation for their community finance program: establishing responsible financing standards; deep impact lending to underserved communities; collecting demographic data; encouraging equitable community engagement; supporting capacity building; and coordinating with interagency partners and private sector entities. This approach to community finance policy has influenced private sector investment into underserved communities by providing tax incentives. As a result, tens of billions of dollars of federal funding have been delivered to communities.
