Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, and Senator Mark Warner (D-VA) sent a letter to Federal Reserve Chair Jerome Powell to urge the Federal Reserve to provide guidance as soon as possible to Subchapter S and Mutual bank Emergency Capital Investment Program (ECIP) recipients on concerns they raised. Chairwoman Waters led the effort in Congress to provide $12 billion in funding to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), which includes $9 billion in critical capital through the ECIP to bolster the lending capacity of CDFIs and MDIs in underserved and minority communities.

“We recognize the range of considerations the Federal Reserve must take into account when considering guidance and appreciate the Federal Reserve shares our goal of ensuring the ECIP program is a success for these institutions and the communities they serve,” wrote the lawmakers. “However, we have heard concerns from certain Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) that there is a lack of clarity on these issues that might unintentionally force these institutions to limit the ECIP capital they accept. In a manner consistent with promoting the safety and soundness of these institutions, we urge the Federal Reserve to give their request for clarity due consideration.”

See the full text of the letter below.

January 18, 2022

The Honorable Jerome Powell Chair
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW Washington, DC 20551

Chair Powell:

We write to encourage the Board of Governors of the Federal Reserve System (Federal Reserve) to review and promptly provide any appropriate guidance on how Emergency Capital Investment Program (ECIP) investments will be considered by the Federal Reserve concerning the Debt to Equity / Leverage Ratio and Double Leverage Ratio for Subchapter S and Mutual bank ECIP recipients.

We recognize the range of considerations the Federal Reserve must take into account when considering guidance and appreciate the Federal Reserve shares our goal of ensuring the ECIP program is a success for these institutions and the communities they serve. However, we have heard concerns from certain Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) that there is a lack of clarity on these issues that might unintentionally force these institutions to limit the ECIP capital they accept.^[1] In a manner consistent with promoting the safety and soundness of these institutions, we urge the Federal Reserve to give their request for clarity due consideration.

As you know, the Department of the Treasury announced the list of institutions approved to receive ECIP investments on December 14 and is reportedly aiming to close those investments at the beginning of this year. Given the quick timeline the Department is pursuing, we urge the Federal Reserve to provide clarity to Subchapter S and Mutual bank ECIP recipients on these questions as soon as possible. At a minimum, these institutions should have a response to the concerns they are raising to make an informed decision.

Thank you for your attention to this matter and for your commitment to the thoughtful and successful implementation of ECIP.

Sincerely,

Mark R. Warner
United States Senator


Maxine Waters
Chairwoman, Committee on Financial
Services, U.S. House of Representatives

cc: The Honorable Janet Yellen, Secretary, U.S. Department of the Treasury

On April 6, 2021, Chairwoman Waters and Senator Warner held an inaugural meeting of the Community Development Finance Agency Group they formed to informally advise them in overseeing the implementation of $12 billion in capital investment and grant programs that Chairwoman Waters and Senator Warner secured to strengthen MDIs and CDFIs. These programs were established by the Consolidated Appropriations Act, 2021 (P.L. 116-260), and are being administered by the U.S. Department of the Treasury and the CDFI Fund.

On April 7, 2021, Chairwoman Waters and Senator Warner wrote to Treasury Secretary Janet Yellen urging the extension of the ECIP application deadline to ensure the highest level of participation from eligible CDFIs and MDIs.

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[1] Letter by CDBA, NBA, et al. to the Honorable Jerome Powell regarding Issues Specific to Subchapter S and Mutual CDFI Banks, per Amendment to the Capital Rule to Facilitate the Emergency Capital Investment Program (ECIP); Docket No. R-1741 and RIN No. 7100-AG11 (Dec. 29, 2021)

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