A Cruel and Short-Sighted Attack on Low-Income Families

The Trump administration has eliminated the entire staff of the Treasury Department’s Community Development Financial Institutions (CDFI) Fund.

This is more than bureaucratic reshuffling — it’s an assault on one of the most effective and bipartisan vehicles for community investment in America. With a single order, the administration has frozen 11 programs that deliver lifelines to small businesses, working families, and neighborhoods across the nation.

For three decades, the CDFI Fund has quietly powered economic opportunity in places where traditional finance rarely reaches — from rural towns to historically disinvested urban communities. Through community-based banks, credit unions, and loan funds, it helps small business owners secure capital, supports affordable housing, and finances essential infrastructure.

Last year alone, nearly 110,000 businesses and over 45,000 affordable housing units were supported. CDFIs are the backbone of many local economies, especially in low-income communities and communities of color that continue to face systemic barriers to accessing credit.

This work has never been partisan. Created under President Bill Clinton and strengthened by both Republican and Democratic administrations, the CDFI Fund has long enjoyed broad support on Capitol Hill. Even conservative leaders like Senator Tim Scott (R-SC), among other Republicans, have urged the Treasury to release its congressionally approved funding.

Their message was simple: CDFIs are indispensable partners in ensuring that economic growth reaches every corner of America. Yet more than 100 CDFI Fund employees have now been terminated. Treasury officials claim the action “aligns with the president’s priorities” — a chilling phrase that reveals how ideological battles are being waged at the expense of everyday Americans.

CDFIs aren’t ideological experiments — they’re logical, market-based tools for building wealth in communities that have long been locked out of opportunities. They leverage public dollars with private capital, multiply their impact through partnerships, and operate with financial discipline and accountability. To gut the infrastructure making this possible is to cripple a network that works.

This decision isn’t only cruel — it’s economically reckless. It undermines decades of bipartisan progress toward inclusive growth. It tells Black entrepreneurs, rural families, and small business owners that their economic futures are expendable. And it signals that the federal government’s commitment to fair access to capital now depends on political winds rather than shared American values.

The timing couldn’t be worse.

Black unemployment, which had reached historic lows in recent years, climbed above 7 percent in August. Small businesses that survived the pandemic are still rebuilding, but their loan approval rates have slowed to their lowest point since the pandemic. And many local economies are contending with higher borrowing costs and reduced federal support.

In this context, dismantling the nation’s community finance apparatus is willful neglect. Congress has a duty to act.

Lawmakers should move swiftly to reopen the government and restore staffing to the CDFI Fund and protect its statutory programs. They should ensure that federal investment in CDFIs continues to flow and that these institutions can operate free from ideological interference. Philanthropy and the private sector, too, must step up — both to fill immediate gaps and to reaffirm the principle that opportunity should not depend on ZIP code or skin color.

The CDFI Fund represents one of the government’s best ideas: that targeted public investment can unlock private enterprise, strengthen communities, and expand shared prosperity. Few programs can claim the success of nearly $300 billion mobilized annually, millions of jobs supported, and thousands of communities transformed. To dismantle it now is to turn our backs on that record of proven success.

America’s future doesn’t depend on tax cuts and deregulation for the wealthiest — it depends on inclusive growth, strong local economies, and a financial system that works for everyone. That’s what CDFIs make possible. And that’s what we stand to lose if this decision is allowed to stand.

The post A Cruel and Short-Sighted Attack on Low-Income Families appeared first on CounterPunch.org.