August 6th, 2020 by WCBC Radio
U.S. Senators Chris Van Hollen (D-Md.) and Brian Schatz (D-Hawai’i) have introduced legislation to create a new $2 billion fund for Community Development Financial Institutions (CDFIs) that would automatically provide capital during a natural disaster or economic crisis, giving impacted communities the support they need for a faster and fuller recovery.
“CDFIs are a key vehicle for funding businesses and projects in economically underserved communities, and the recession caused by the COVID-19 pandemic has hit these communities hardest. While we work on getting emergency funds to these neighborhoods, we must invest in keeping businesses and families afloat during both this and future crises by creating an automatic boost for this resource,” said Senator Van Hollen.
Senator Van Hollen has introduced legislation to inject $1 billion into the existing CDFI fund to jumpstart economic activity in these hard-hit communities.
“This pandemic has shown us that when a crisis or a disaster strikes, families and communities need immediate support,” said Senator Schatz. “By creating a crisis fund for CDFIs with automatic triggers, we can quickly provide aid to the people and small businesses that need it most.”
Natural disasters can wreak havoc on personal finances. They lower credit scores and increase debt collections, bankruptcies, credit card debt, and mortgage delinquencies and foreclosures. These impacts are more acute for low-income communities and communities of color. Economic crises also cause lasting damage. The 2008 financial crisis and resulting recession caused median household wealth to drop 39 percent between 2007 and 2010. This loss of wealth and increase in poverty disproportionately impacted younger, lower income, and minority households.
