Federal Reserve pick has long backed CDFIs and their ability to deliver financial services to underserved communities.
Michael S. Barr, President Biden’s choice to be the Federal Reserve’s vice chair for supervision, is not only one of the architects of Dodd-Frank, but also a fervent defender of the Community Development Financial Institutions (CDFI) program.
When Biden announced his choice of Barr, dean of the University of Michigan’s public policy school, to serve as one of the nation’s top banking regulators, critics immediately seized upon his work on Dodd-Frank when he served in President Obama’s Treasury Department.
“Michael Barr has defended Dodd-Frank’s big-bank bailout mechanism, which enshrined into law taxpayer bailouts of banks,” said Senate Banking Committee ranking Republican Sen. Patrick Toomey of Pennsylvania.
Toomey’s committee will consider Barr’s confirmation.
Why Barr Supports the CDFI Program
Despite his direct involvement with Dodd-Frank, a review both of articles Barr has written and his congressional testimony reveal he is also a big fan of the CDFI program.
“CDFIs are able to reach low-income populations that have often traditionally lacked access to mainstream lenders,” Barr told the House Financial Services Committee in 2010, when he was serving as the Treasury Department’s assistant secretary for financial institutions. “CDFIs also help bring mainstream financial institutions to these markets, for example through participating in loans with, or co-investing with, mainstream lenders.”
He added: “In short, CDFIs help finance our communities and revitalize our neighborhoods.”
In 2020, Barr told the Aspen Institute Economic Opportunities Program that if policymakers wanted to reach small businesses with pandemic relief money, they should make better use of CDFIs.
“CDFIs have a track record of serving minority entrepreneurs,” he stated. “They are in the communities they’re serving and they’re able to do a much better job often.”
Stance on Other Banking Regulations Remains Unchanged
To be sure, Barr has also continued to defend the regulatory regime created in Dodd-Frank.
“Ending Dodd-Frank would be deeply misguided and likely to recreate the very conditions that led to the 2008 financial crisis, shuttered American businesses, and cost millions of Americans their jobs,” he wrote in an op-ed in Fortune in December 2016. At the time, the Trump Administration was proposing to roll back many of the act’s provisions.
He likewise continues to be an outspoken defender of the Consumer Financial Protection Bureau (CFPB)—an agency he also helped create.
How Your Credit Union Can Access the CDFI Program
At present, there are 464 CDFI credit unions, representing 33.4% of all certified institutions. To learn more about the benefits of the program, as well as how to qualify, visit our CDFI Certification page or reach out to us directly through our consulting services today!