OMB’s Vought: CDFIs funded ‘woke’ programs

• Key insight: The White House budget would cut funding from the Community Development Financial Institution Fund, as Vought outlined in a House Budget hearing. 
• Forward look: The program historically has broad bipartisan support in Congress, including a large number of Republicans, but OMB can cause delays in disbursing CDFI funding, even if Congress fully funds the programs again. 
• What’s at stake: The debate over the fund has been a rare example of public intraparty disagreement between congressional Republicans and the Trump administration. 

WASHINGTON — Office of Management and Budget Director Russell Vought outlined his opposition to the Community Development Financial Institutions Fund in a House Budget meeting on Wednesday. 

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The White House’s budget includes cuts to the CDFI Fund, despite congressional Republicans’ vocal support for the program. Many small banks receive these funds, and larger institutions can receive Community Reinvestment Act credit for grants given to nonbank CDFIs. 

While OMB released the congressionally appropriated funds last week after a long delay, the wait spooked many CDFI institutions that rely on the funding. The debate over the fund has been indicative of a rare intraparty disagreement among Republicans, with many congressional Republicans and even the Treasury Department pushing for the appropriated money, while OMB has resisted issuing paperwork that would allow Treasury to move forward with allotting the funds to banks and other lenders. 

“If you look at what these CDFIs were funding, many of them continue to be woke,” Vought said in a House Budget hearing on Wednesday. “They continue to be pushing an ideology that is very harmful.” 

In addition to his role as head of the OMB, Vought also serves as acting director of the Consumer Financial Protection Bureau. Because the CFPB is funded by requests to the Federal Reserve, the CFPB and its funding issues were largely out of scope for the House Budget hearing. 

Vought’s comments about the CDFI program echo the White House’s rhetoric on the CDFI Fund. The latest budget request from the White House said that the programs supported “woke” and pro-DEI causes, despite the fact that many of the funds are disbursed in deep South, dark-red states. 

Vought also referenced the safety and soundness of the program’s loans, an argument that the White House had not yet levied against the program. 

“When a CDFI does a loan, it is exempt from ability-to-pay requirements, so you’re getting a loan on the books that is not necessarily as sound and secure as one that would come from a typical bank,” Vought said. “So we have issues with this program.”