Rep. Tulsi Gabbard Introduces Bill to Encourage Investment in Small Business, Local Agriculture

January 21, 2020
Press Release
Washington, DC—Rep. Tulsi Gabbard (HI-02) introduced H.R.5612, The Small Business and Community Investments Expansion Act, which will allow certain community development financial institutions (CDFIs) and credit unions who are members of a Federal Home Loan Bank to finance small business, agricultural, and community development activities.
“Community financial institutions and credit unions reach underserved communities across the country. Small businesses and farmers are the backbone of our nation and vital to America’s economic well-being,” said Rep. Tulsi Gabbard. “This bill will boost the ability of local financial institutions to provide entrepreneurs, farmers and families with the resources that will help strengthen communities across the nation.”
“Hawai‘i credit unions are grateful for Congresswoman Tulsi Gabbard’s leadership role in introducing this bill.  If enacted, this legislative measure will provide more funding sources for community development, small businesses, and agriculture – all of which are important for Hawai‘i’s economic viability.  Access to long-term advances from the Federal Home Loan Bank would bring parity with banks to credit unions and community development financial institutions in meeting their liquidity needs.” said Dennis K. Tanimoto, President & Chief Executive Officer, Hawaii Credit Union League.
“Greater access to capital allows CDFIs to do more in underserved communities. OFN supports this legislation which opens new doors for non-depository CDFIs to pledge additional types of collateral and receive advances from the Federal Home Loan Bank System,” said Jennifer A. Vasiloff, Chief External Affairs Officer, Opportunity Finance Network
“CDFIs are increasingly investing in some of the poorest communities in America – where poverty is over 30 percent or median incomes are under 60 percent of the area median. Further compounding issues of poverty, these urban neighborhoods and rural communities typically lack access to affordable financial services, especially with the growing trend of community bank closures,” said Bob Rapoza, spokesperson of the CDFI Coalition. “The CDFI Coalition applauds Congresswoman Gabbard’s introduction of this bill, which would allow CDFIs to access important resources from Federal Home Loan Bank. This capital will, in turn, create affordable housing; improve education, childcare, healthcare and healthy food access, grow small business opportunities and create jobs that benefit low-income communities and people served by CDFIs nationwide.”
Background: In 2008, Congress passed the Housing and Economic Recovery Act, which permitted Treasury-certified non-depository CDFIs to become a member of a FHLBank. CDFIs could join, pledge collateral, and receive advances (loans). This change enabled CDFIs to use their current loan portfolios to raise cash to make new loans. 
Unfortunately, the bill did not clarify that CDFIs could access advances or pledge small businesses, small agriculture, and community economic development collateral. CDFIs were able to join as regular members, which restricted their collateral to long-term housing loans. 
Moreover, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 allowed federally insured commercial banks and credit unions to join an FHL Bank. Yet, the only FHLB members who are currently authorized to have these opportunities are FDIC insured depository institutions. 
H.R.5612, the Small Business and Community Investments Expansion Act provides CDFIs and credit unions with the same collateral flexibility and financing opportunities certain commercial banks can currently access.
More broadly, Rep. Tulsi Gabbard has fought for more equitable access to and responsible oversight of the financial sector. She has long been a critic of Wall Street and big banks, and has consistently worked to make the financial sector more accessible and accountable to individuals and communities, especially in the wake of the 2008 financial crisis. She has voted against and urged her colleagues to oppose measures that would weaken consumer protections. She introduced H.R. 3885, the Wall Street Banker Accountability for Misconduct Act, which would hold hold senior executives at Wall Street’s biggest banks accountable for misconduct under their watch. 
About Rep. Tulsi Gabbard: Congresswoman Tulsi Gabbard is serving her fourth term in the United States House representing Hawai‘i’s Second District, and serves on the House Armed Services and Financial Services Committees. She previously served on the House Foreign Affairs Committee and Homeland Security Committee. She was elected to the Honolulu City Council in 2010, and prior to that at age 21, was elected to the Hawaiʻi State Legislature in 2002, becoming the youngest person ever elected in the state. Tulsi Gabbard has served in the Hawaiʻi Army National Guard for 16 years, is a veteran of two Middle East deployments, and continues to serve as a Major. Learn more about Rep. Tulsi Gabbard...
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