Overview

Title

To amend the Community Development Banking and Financial Institutions Act of 1994 to reauthorize and improve the community development financial institutions bond guarantee program, and for other purposes.

ELI5 AI

H.R. 10422 is a plan to change the rules so that big community projects can get more money faster, but it might be tricky for smaller projects to join in. It also wants to check if the project money is being used well in about a year and three years after it starts.

Summary AI

H.R. 10422, also known as the “CDFI Bond Guarantee Program Improvement Act of 2023,” aims to enhance the Community Development Financial Institutions (CDFI) bond guarantee program, part of the Community Development Banking and Financial Institutions Act of 1994. The bill suggests that the CDFI program provides important long-term capital for community development and economic growth in underserved communities. It proposes changes such as setting a minimum guarantee amount of $25 million, capping the total for all guarantees at $1 billion per fiscal year, and extends the authorization of the program by four years. Additionally, it requires the Secretary of the Treasury to report on the program's effectiveness within one year and again three years after the bill's enactment.

Published

2024-12-16
Congress: 118
Session: 2
Chamber: HOUSE
Status: Introduced in House
Date: 2024-12-16
Package ID: BILLS-118hr10422ih

Bill Statistics

Size

Sections:
4
Words:
614
Pages:
3
Sentences:
16

Language

Nouns: 216
Verbs: 37
Adjectives: 25
Adverbs: 3
Numbers: 35
Entities: 62

Complexity

Average Token Length:
4.53
Average Sentence Length:
38.38
Token Entropy:
4.78
Readability (ARI):
22.70

AnalysisAI

Summary of the Bill

H.R. 10422, introduced in the House of Representatives, seeks to amend the Community Development Banking and Financial Institutions Act of 1994. Its primary aim is to reauthorize and enhance the Community Development Financial Institutions (CDFI) Bond Guarantee Program. This initiative is intended to provide community development financial institutions with a sustainable source of capital, supporting their mission to boost economic opportunities and development in underserved communities across the United States. Key provisions include adjustments to bond guarantee thresholds, the total guarantee amount permitted annually, and the timeline for program expiration. Additionally, it mandates periodic reports on the program's effectiveness.

Significant Issues

One prominent issue is the requirement that guarantees be issued for amounts no less than $25,000,000. This high threshold may inadvertently prioritize larger organizations capable of handling such sums, potentially sidelining smaller projects that might be more locally focused or community-driven. Another concern is the sizable fiscal cap of $1,000,000,000 in guarantees each year, which poses risks of financial mismanagement if not rigorously overseen.

Additionally, there is a lack of specified criteria for evaluating the effectiveness of the CDFI bond guarantee program, which could result in vague reporting that fails to provide actionable insights. The responsibility for these reports is given exclusively to the Secretary of the Treasury, potentially raising questions about the impartiality and comprehensiveness of the evaluations.

Impact on the Public

The bill has the potential to bolster economic development in underserved areas, thus benefiting the broader community if implemented effectively. By providing financial institutions with access to long-term capital, distressed neighborhoods might see improved infrastructure, enhanced services, and increased economic activity. However, the constraints related to the minimum guarantee amount could restrict the impact on smaller, local initiatives that might contribute meaningfully to community revitalization.

Impact on Specific Stakeholders

For larger financial institutions and development projects, this bill could represent a significant opportunity by granting access to substantial funding that can be used to advance large-scale development goals. These entities stand to benefit significantly from the availability of guaranteed bonds.

Conversely, smaller community groups, potentially left without the means to compete for such large guarantees, might struggle to access the funding needed for localized projects. Additionally, if oversight measures are not strengthened, taxpayers could face the repercussions of possible mismanagement or inefficient use of funds, raising accountability concerns.

In conclusion, while H.R. 10422 aims to energize community development finance, it necessitates careful consideration of equitable funding access and robust oversight to ensure that its benefits effectively reach the intended stakeholders.

Financial Assessment

The bill H.R. 10422, titled the "CDFI Bond Guarantee Program Improvement Act of 2023," discusses certain financial allocations related to the community development financial institutions bond guarantee program. The primary focus is on ensuring that there is a significant and sustainable flow of capital to support community and economic development efforts, particularly in underserved communities.

The bill proposes specific financial conditions to regulate this flow of capital:

  1. Minimum Guarantee Amount: The bill mandates that no guarantee under the program should be less than $25,000,000. This aims to ensure that the projects supported are of substantial size, potentially impacting broader community development. However, this stipulation could inadvertently exclude smaller projects or organizations that cannot meet this threshold. Such a limitation raises concerns about equitable access to vital funds, particularly for smaller community-based initiatives that might require less funding but still contribute significantly to local economic development.

  2. Cap on Total Guarantees: There is a yearly cap set at $1,000,000,000 for the total of all guarantees. While this cap is indicative of the program's expansive potential reach and its importance for substantial economic projects, there is an accompanying risk. Without stringent oversight and meticulous resource allocation, this large sum could lead to financial mismanagement. Ensuring accountability in how these substantial funds are utilized is crucial to maintaining taxpayer trust and achieving the program’s objectives effectively.

  3. Extension of Program Authorization: The bill extends the authorization of the program by four years. This extension is tied to the enactment date of the bill rather than a specific calendar date. This open-ended approach could lead to confusion if the bill's passage is delayed, potentially creating logistical challenges for implementing the financial aspects of the program promptly.

  4. Reporting Requirements: The bill requires the Secretary of the Treasury to issue reports on the program's effectiveness one year and three years after its enactment. However, there is no clear indication of the criteria that will be used to assess this effectiveness. Precise and consistent evaluation standards are necessary to ensure the reports provide a genuine reflection of the program's impact and financial prudence.

In conclusion, while the bill outlines ambitious financial allocations to bolster community and economic development through substantial bond guarantees, addressing the issues related to access, oversight, and evaluation criteria remains essential for achieving equitable and effective outcomes.

Issues

  • The limitation set by the bill to guarantee only amounts greater than $25,000,000 (Section 3) could exclude smaller projects or organizations unable to meet this threshold, potentially favoring larger organizations over smaller community initiatives. This might lead to concerns about equitable access to funding and support for local development.

  • The bill proposes a substantial amount—a total of $1,000,000,000 in guarantees in any fiscal year (Section 3). Without adequate monitoring and oversight, there is a risk of financial mismanagement or inefficient allocation of resources, which could be a significant concern for taxpayers and government accountability.

  • Section 2 of the bill does not detail oversight or accountability measures for the use of guaranteed bonds. This lack of clarity might raise concerns about ensuring funds are appropriately utilized, especially given the large sums involved.

  • The emphasis on legal references and terminology specific to the financial industry in Sections 2 and 3 could render the bill less accessible to the general public and policymakers who may lack familiarity with these documents, thus impacting informed decision-making and public engagement.

  • The expiration date for the guarantee program is amended to '4 years after the date of enactment' in Section 3, which might cause confusion and lacks clarity. A specific date could prevent misunderstandings or logistical issues if the Act's passage is delayed.

  • The criteria for evaluating the effectiveness of the CDFI bond guarantee program, as mandated in Section 4, are not specified. This omission could lead to vague or inconsistent reports, challenging efforts to accurately assess the program's impacts and outcomes.

  • The bill places the responsibility for report creation on the Secretary of the Treasury alone (Section 4), without mention of consultation or oversight from other entities. This could raise concerns about impartiality and the comprehensiveness of the program's evaluation.

Sections

Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.

1. Short title Read Opens in new tab

Summary AI

The act can be officially called the “CDFI Bond Guarantee Program Improvement Act of 2023.”

2. Sense of Congress Read Opens in new tab

Summary AI

Congress believes that the CDFI Bond Guarantee Program gives financial institutions a reliable way to get long-lasting funding, which helps increase economic opportunities and support community development in underserved and troubled areas in the U.S.

3. Guarantees for bonds and notes issued for community or economic development purposes Read Opens in new tab

Summary AI

The section amends the Community Development Banking and Financial Institutions Act to change the calculation of certain financial instruments, set a minimum guarantee amount of $25 million with a cap of $1 billion per fiscal year, and update the expiration date of the program's guarantee provision to four years after the new Act's enactment. It also makes a clerical update to the table of contents of the related regulatory improvement act.

Money References

  • Secretary may not guarantee any amount under the program equal to less than $25,000,000, but the total of all such guarantees in any fiscal year may not exceed $1,000,000,000.”; and (3) in subsection (k), by striking “September 30, 2014” and inserting “the date that is 4 years after the date of enactment of the CDFI Bond Guarantee Program Improvement Act of 2023”. (b) Clerical amendment.—The table of contents in section 1(b) of the Riegle Community Development and Regulatory Improvement Act of 1994 (Public Law 103–315; 108 Stat. 2160) is amended by inserting after the item relating to section 114 the following: “Sec. 114A. Guarantees for bonds and notes issued for community or economic development purposes.”.

4. Report on the CDFI bond guarantee program Read Opens in new tab

Summary AI

The Secretary of the Treasury is required to issue a report to specific Senate and House committees on how effective the CDFI bond guarantee program is. This report must be provided within one year and again three years after the law is enacted.