Treasury CDFI Fund director resigns

The Department of the Treasury has named a new director of the Community Development Financial Institutions Fund following the departure of former Director Pravina Raghavan and amid growing turmoil in public support for the sector.

A Treasury official thanked outgoing Director Raghavan for her service in a statement and expressed optimism about her successor, former CDFI Fund legal counsel Dietrich Douglas, who will serve as acting director. Raghavan resigned on June 27 according to the Community Development Bankers Association. Raghavan did not immediately respond to a request for comment.

“We thank Director Raghavan for her dedicated public service and leadership of the CDFI Fund,” said Alex Smith, deputy assistant secretary for community and economic development. “As we look to strengthen the CDFI Fund’s impact, his [Douglas’] leadership will help ensure programs are executed efficiently, taxpayer resources are used responsibly, and communities have the tools they need to drive economic growth. I’m confident his leadership will serve the team and its stakeholders well during this transition”

The CDFI Fund director is appointed by the Treasury secretary and is not subject to Senate confirmation. Outgoing CDFI Fund Director Pravina Raghavan spent just over a year in the role, after being appointed by Secretary Janet Yellen in March 2024. She joined the CDFI Fund after years directing another private-public partnership, the National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership. 

The CDFI Fund — established by the Riegle Community Development Regulatory Improvement Act of 1994 — supports financial institutions that serve economically distressed communities. The fund certifies financial institutions — including banks, credit unions, nonprofit loan funds, microloan funds and venture capital funds — as CDFIs, giving them access to specialized pools of funding in exchange for a commitment to focus on financial inclusion and community development projects. 

CDFIs provide affordable lending and financial services to underserved communities, particularly in remote areas that may not have access to major banking institutions. But despite having broad bipartisan support in Congress, the fund has been under fire from the Trump administration after the president issued an executive order in January to eliminate diversity, equity and inclusion in government and another in March aimed specifically at cutting the CDFI Fund to the maximum extent allowed by statute. The Treasury has also not issued a request for applications for its Bank Enterprise Award program, suggesting it may not make those awards this year.

Trump had an antagonistic relationship with CDFIs before, proposing deep cuts to the CDFI Fund’s budget in annual budget proposals during his first term, citing concerns about the federal government’s role in subsidizing financial activities that could be handled by the private sector.

In response to congressional scrutiny of the decision to rollback the program in a May hearing, Treasury Secretary Bessent pointed to a new proposal in the administration’s “skinny budget” that created an additional work program he said has a similar mission to the CDFI Fund.

The order has stoked disapproval with community lending advocates, a rare area of overt disagreement between the administration and the banking industry. Community banking trade group the Independent Community Bankers of America wrote to Treasury Secretary Scott Bessent and lawmakers urging them to uphold the public-private program which has long supported community lenders. Over 90% of congressional districts rely on CDFIs to some extent and for every dollar the government invests, CDFIs leverage $8 in private sector investment according to the ICBA.

In March, Sens. Mark Warner, D-Va., and Sen. Mike Crapo, R-Idaho — co-chairs of the Senate Community Development Finance Caucus and influential members of the Senate Banking Committee — reaffirmed bipartisan support for the fund and its mission. 

Advocates for military credit unions this month urged top lawmakers on a Senate appropriations subcommittee to restore funding for CDFIs.