CDFIs used pandemic aid of $9.5 billion to provide financial products, increase reserves, GAO finds

Recipients of programs meant to assist community development financial institutions (CDFI) in the face of the coronavirus crisis – including those considered “high risk” – mainly used the $9.5 billion they received to provide financial products and to increase reserves, according to a report issued Friday by the congressional watchdog.

The Government Accountability Office’s (GAO) report on three COVID-19 related assistance programs that received additional funds in 2021 to help CDFIs deal with the pandemic found that of the $12 billion appropriated for three programs, Treasury has distributed funds to only two: the Rapid Response Program and the Emergency Capital Investment Program. Those two programs distributed the $9.5 billion to CDFIs.

A third program, the Equitable Recovery Program, was appropriated $1.75 billion – but none of those funds have yet been awarded by Treasury, the report stated.

The GAO report said that the Rapid Response Program was “fully disbursed,” at $1.25 billion, with primary recipients being loan funds (54%) and credit unions (28%). The median award was $1.83 million.

The Emergency Capital Investment Program was appropriated $9 billion but had distributed just $8.28 billion as of Sept. 21, 2022. Primary recipients were banks, savings associations, and holding companies (57%) and credit unions (43%). The median award, Treasury said, was $29.94 million.

The GAO said Treasury took steps to address potential risks to program integrity created by aspects of the emergency programs, which included conducting risk-based application reviews and imposing an “ability to pay” requirement.

Community Development Financial Institutions: Analysis of Annual and Emergency Assistance and Treasury Efforts to Address Program Risks

Be the first to comment

Leave a Reply

Your email address will not be published.