DES MOINES — U.S. Representatives Zach Nunn (IA-03) and Don Davis (NC-01) today introduced bipartisan legislation to preserve access to credit for Iowa’s rural communities. The Rural Credit Access Act will modernize the Community Development Financial Institution (CDFI) program at the U.S. Department of Treasury to create transparency and prevent unintentional harm to rural communities.
“Too often, our small towns are overlooked, and I’ve made it my mission in Congress to put them first,” said Rep. Nunn. “CDFIs play a critical role in supporting rural small businesses, community centers, schools, and more that may otherwise be considered too risky to receive loans. By improving this program, we can continue to strengthen rural communities by generating jobs and creating new opportunities for families at a time when that investment is needed.”
Banks, credit unions, and other financial institutions who serve rural, underserved, or low-income communities can be designated as CDFIs. The CDFI designation is obtained through Treasury and allows banks, credit unions, or other financial institutions to invest in community development projects and provide essential financial services.
“Our dedication to financial inclusivity and the vital role CDFIs play in our economy is vital,” said Rep. Davis. “By supporting these institutions through challenging times, we’re investing in the future of rural communities and ensuring no one is left behind in our pursuit of economic prosperity.”
Across the country, there are 1,462 CFDIs, including nine in Iowa. These financial institutions can invest further in their communities. According to Veridian, for every $1 million received in CDFI funding, financial institutions can lend nearly $20 million in mortgages for those who may not otherwise qualify for a home loan.
“Credit unions have a long history of having a strong presence in underserved areas and low-income communities,” said Jim Nussle, America’s Credit Unions President and CEO. “With credit unions now making up nearly one third of CDFIs, the CDFI Fund is an important partner for the credit union community in serving these areas. We thank Congressman Nunn for introducing this important measure to improve the operations of the Fund. This legislation will ensure his constituents in Iowa and consumers across the country have safe and reliable access to CDFI institutions and the programs they provide without unexpected disruptions in service.”
The bipartisan Rural Credit Access Act will require Treasury to:
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Enhance transparency by developing a required notification process to notify a CDFI if they are at risk of losing their certification for a reason other than fraud or inappropriate behavior
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Create an Ombudsman’s Office to help assist financial institutions as they navigate the CDFI application
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Protect taxpayer funds by preventing CDFIs with evidence of fraud from participating in arbitration
Rep. Nunn introduced the bill at a press conference in Des Moines with the Iowa Credit Union League, Community First Credit Union, and Veridian. Text of the bill can be found here.