Treasury Department Released $289 Million Just Before Funding Deadline

The Treasury Department informed a federal judge on Monday that it had obligated $289 million in previously frozen funding for mission-driven lenders just days before those funds would expire. This action came at the last moment before the fiscal year ended on September 30.

The funds had been appropriated by Congress for Community Development Financial Institutions (CDFIs), which provide capital to underserved communities and small businesses. However, the administration had withheld these funds throughout the year, despite the program's historical bipartisan support.

Administration officials had characterized the CDFI Fund as "woke" and pursuing a partisan agenda. Efforts to diminish the fund included budget cuts and staff reductions during a previous government shutdown, though layoffs were later reversed.

Economic advocacy groups had sued the Treasury Department and the Office of Management and Budget, arguing that the money was being effectively frozen by delay. CDFIs serve as vital financial resources in areas lacking traditional banking services, offering training, mentorship, and business coaching in addition to loans.

The lawsuit highlighted that congressionally appropriated funds that are not obligated by an agency expire at the end of the fiscal year. The department's late release of the $289 million prevented the funds from being lost.