Trump Bid to Fire Community Finance Staff Faces Bipartisan Fight

The Trump administration’s plan to terminate all staff at a Treasury Department agency supporting community financial institutions is drawing pushback from industry groups and even some Republican lawmakers.

The Treasury Department last week told staff at the Community Development Financial Institutions Fund they will be subjected to a reduction-in-force order scheduled to take effect Dec. 13, according to a notice obtained by Bloomberg Law.

The planned firings are part of a broader RIF affecting around 4,000 federal workers that the Trump administration is pushing to implement during the government shutdown.

Unlike some of the agencies targeted in Trump’s mass firing, however, the CDFI Fund—active in urban, suburban, and rural areas—enjoys broad bipartisan support.

Sen. Mike Crapo (R-Idaho), the chairman of the Senate Finance Committee and the co-chair of the Senate CDFI Caucus, “is discouraged by the announcement and is hoping to get the decision reversed,” spokesperson Melanie Lawhorn said in an email. Crapo is circulating a letter among Senate colleagues urging the administration to undo the staff cuts, Bloomberg reported, citing a person familiar with the matter.

Lawmakers from both parties also opposed the administration’s earlier attempt to slash the program’s funding by nearly $300 million.

“There’s a bipartisan CDFI Caucus for a reason, and that’s because entrepreneurship has been a backbone of the US economy,” said Natalie Madeira Cofield, the president and CEO of the Association for Enterprise Opportunity, a nonprofit network focused on small business financing.

Trump Target

Created in 1994, the CDFI Fund provides money and technical assistance to small financial institutions focused on affordable housing development, small businesses, and other community needs.

Big banks and other investors can funnel additional money into financial institutions—including small banks and credit unions and independent loan funds—that get federal CDFI certification.

For every $1 in federal funding, the CDFI program typically generates at least $8 in private investments, according to the Treasury Department.

But the CDFI Fund has long been a Trump administration target, despite the bipartisan support for a program that disburses money to communities that might otherwise lack access to capital.

Trump issued an executive order in March seeking to close the fund entirely, shortly after signing the fiscal 2025 stopgap spending measure that renewed the fund’s $324 million federal allotment, enough to support more than 80 full-time employees.

The administration then proposed a $291 million funding cut for the fund in fiscal 2026, though it also pushed to create a new $100 million program targeting investments in rural communities.

The CDFI Fund last month separately updated its application criteria and barred financial institutions seeking grants or CDFI certification for programs designed to increase climate resilience or to benefit Black, Hispanic, Vietnamese, Filipino, and other minority communities.

Last week’s RIF notice says the Treasury Department has determined that the CDFI Fund’s “programs, projects, and activities do not align with the President’s priorities.”

“They weren’t able to wipe the CDFI Fund authorization,” said Mark Pinsky, a partner at CDFI Friendly America, an advocacy group. “They weren’t able to eliminate the CDFI Fund appropriation. So now they’re trying this.”

Real-World Impact

Terminating the entire staff at the CDFI Fund will eliminate a key source of financial support for community projects, said Bill Bynum, the CEO of HOPE Credit Union in Jackson, Miss.

“If those resources are not available, it really undermines the incredible work that has been done over 30 years,” he said.

The effective closure of the CDFI Fund would also curtail technical assistance for small financial institutions and federal certification. Without certification as a CDFI, it will be harder for small banks, credit unions, and loan funds to attract investment from big banks and philanthropies, Bynum said.

The fund’s staff is also charged with overseeing programs such as the New Markets Tax Credit, which allows investors to get a tax break for investing in underserved communities.

President Donald Trump has repeatedly said he intends to shut down “Democrat programs” during the shutdown. But the CDFI Fund spreads its money across red and blue states alike. Republicans represent eight of the 10 districts that that received the most CDFI investment over the past decade, according to the Urban Institute.

The White House didn’t respond to a request for comment.

Uphill Fight

Crapo and other top lawmakers said they will try to roll back the announced RIF at the CDFI Fund.

The Trump administration’s “unprecedented and unconstitutional attempt to fire all the CDFI Fund staff at the Treasury Department will effectively shutter the program by leaving no one to carry out its statutory mission and deploy previously appropriated funds,” Rep. Maxine Waters (D-Calif.), the ranking member of the House Financial Services Committee, said in an Oct. 10 statement.

Industry groups for small financial institutions, such as the Independent Community Bankers of America and America’s Credit Unions, have also raised alarms about the mass firing.

A federal judge in California on Wednesday temporarily paused the governmentwide RIFs, holding the Trump administration exceeded its authority. The order is likely to be appealed, however.

Federal employees’ fate may ultimately be determined by a a fight within the Trump administration.

Treasury Secretary Scott Bessent is on record supporting CDFIs. Many Democrats, including Waters, say the terminations at the CDFI Fund were driven by White House Budget Director Russell Vought.

The Treasury Department and the Office of Management and Budget didn’t respond to requests for comment.

Any effort to reverse the RIFs will have to go through Vought.

“I’m not saying it’s going to be easy,” Greg Mesack, the senior vice president of advocacy at America’s Credit Unions, said on a call with reporters.