Access to Fair Financing for Opportunity and Resilient Development Act

Bill Number: S. 3940
Origin Chamber: Senate
Congress: 119th Congress, Session 2
Policy Area: Finance and Financial Sector
Status: Introduced
Latest Action: 2026-02-26: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Last Updated: 2026-06-25T12:18:24Z

AI-Generated Summary

Purpose of the Legislation

The Access to Fair Financing for Opportunity and Resilient Development Act aims to strengthen the Community Development Financial Institutions (CDFI) Fund, a U.S. government program that supports financial institutions serving underserved communities. It seeks to improve access to capital, enhance liquidity for these institutions, extend key programs, and promote homeownership in Native American, Alaska Native, and Native Hawaiian communities, ultimately fostering economic opportunity and community development in distressed or rural areas.

Key Provisions

Annual Testimony Requirement: The Secretary of the Treasury (or a designee) must testify annually before the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services (or their subcommittees) on the CDFI Fund's operations from the prior fiscal year, at the committees' discretion.
CDFI Bond Guarantee Program Improvements:
Affirms the program's role in providing long-term capital to CDFIs for underserved populations.
Adjusts guarantee calculations to focus on outstanding principal amounts.
Sets a minimum guarantee of $25 million per transaction, with a total annual cap of $1 billion.
Extends program authority until the later of four years after enactment or December 31, 2030.
Requires a report to Congress within three years on the program's effectiveness.
Capitalization Assistance for Liquidity:
Authorizes the CDFI Fund to provide assistance for purchasing loans or loan participations from CDFIs, offering guarantees or credit enhancements (like loan loss reserves) to boost liquidity, and supporting other liquidity-enhancing activities.
Allows non-CDFI organizations focused on community development to receive aid, prioritizing those with experience in loan structures, capacity to expand CDFI lending, and broad geographic or underserved borrower reach.
Increases the assistance cap per organization from $5 million to $20 million (removing the three-year limit).
Directs proceeds from emergency capital investments back into the Fund for further assistance to CDFIs.
Mandates annual reports to Congress on Fund activities, including loan purchases, impacts on affordable housing, competitiveness, and liquidity of CDFIs.
Native CDFI Relending Program:
Establishes a set-aside of up to $50 million annually from rural housing loan funds for direct loans to "Native CDFIs" (CDFIs at least 51% owned/controlled by and serving Native communities).
Targets homeownership loans for members of Indian Tribes, Alaska Native, or Native Hawaiian communities, prioritizing those on "priority Tribal land" (e.g., reservations, trust lands, or adjacent areas).
Requires a 20% non-federal matching contribution from recipients (waivable for loans on priority Tribal land).
Provides grants equal to 20% of loan amounts for operational support, based on performance and funding availability.
Authorizes $1 million annually (fiscal years 2025–2027) for technical assistance and outreach to Native CDFIs or a national Native housing organization.
Allows up to 3% of funds for administrative costs.
Requires annual reports from Native CDFIs on lending activities and from the Secretary of Agriculture to Congress on program outcomes; includes a three-year evaluation with recommendations for expansion.

Significant Changes to Existing Law

Amends the Community Development Banking and Financial Institutions Act of 1994 to add testimony requirements, refine bond guarantee mechanics (e.g., simplifying calculations and extending expiration), and expand liquidity assistance beyond traditional CDFIs while raising funding limits.
Modifies the Housing Act of 1949 by adding a new subsection for the Native CDFI program, introducing a dedicated set-aside, matching requirements, and reporting/evaluation mandates not previously in place.
Redirects emergency investment proceeds to support ongoing CDFI aid, waiving certain assistance limits.
These changes build on prior programs but introduce new flexibilities, such as broader eligibility for liquidity aid and specific Native-focused relending, while eliminating outdated caps and dates (e.g., 2014 expiration for bonds).

Potential Impacts

Government Agencies: Increases oversight and reporting burdens on the Treasury Department (e.g., annual testimony and reports) and the Department of Agriculture (for Native relending administration), potentially requiring new regulations and evaluations. May enhance coordination between agencies for CDFI support.
Citizens: Improves access to affordable financing and housing for underserved populations, particularly in rural, distressed, or Native communities, by enabling more loans for homes, businesses, and development projects. Could boost economic mobility for low-income, minority, or Native individuals through better liquidity for local lenders.
International Relations: No direct impacts, as the bill focuses on domestic community development.

Main Stakeholders Affected

Community Development Financial Institutions (CDFIs): Gain enhanced capital access, liquidity tools, and bond guarantees, especially Native CDFIs benefiting from targeted relending and grants.
Underserved Communities: Residents in low-income, rural, or distressed areas, including Native American, Alaska Native, and Native Hawaiian populations, who may see increased homeownership and economic investment opportunities.
Borrowers and Households: Individuals seeking loans for housing or community projects, with priorities for those on Tribal lands.
Congress and Committees: Senate and House banking/agriculture committees receive more information and influence over CDFI operations.
Treasury and Agriculture Departments: Responsible for implementation, reporting, and fund management.

Notable Legal, Constitutional, or Political Implications

Legal: Expands federal guarantees and assistance without new appropriations (using existing funds), but authorizes specific spending for outreach; requires regulations to implement changes, ensuring compliance with federal lending rules. The non-federal matching requirement promotes private leverage but includes waivers for equity.
Constitutional: Aligns with Congress's spending power under Article I to promote general welfare through community development; no apparent conflicts with equal protection or property rights, as it targets underserved groups without excluding others.
Political: Bipartisan sponsorship (from 28 senators across parties) signals broad support for equity-focused financial aid. Enhances congressional accountability over executive agencies via testimony and reports, potentially influencing future budgets. The Native-specific provisions address historical underinvestment in Tribal communities, advancing reconciliation efforts, while evaluations could lead to program expansions or adjustments based on demand.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Daines, Steve [R-MT]

Cosponsors (41)

Sen. Warner, Mark R. [D-VA], Sen. Crapo, Mike [R-ID], Sen. Smith, Tina [D-MN], Sen. Rounds, Mike [R-SD], Sen. Kim, Andy [D-NJ], Sen. Risch, James E. [R-ID], Sen. Schumer, Charles E. [D-NY], Sen. Justice, James C. [R-WV], Sen. Klobuchar, Amy [D-MN], Sen. Fischer, Deb [R-NE], Sen. Booker, Cory A. [D-NJ], Sen. Wicker, Roger F. [R-MS], Sen. Hickenlooper, John W. [D-CO], Sen. Sheehy, Tim [R-MT], Sen. Van Hollen, Chris [D-MD], Sen. Sullivan, Dan [R-AK], Sen. Gillibrand, Kirsten E. [D-NY], Sen. Hyde-Smith, Cindy [R-MS], Sen. Coons, Christopher A. [D-DE], Sen. Peters, Gary C. [D-MI], Sen. Bennet, Michael F. [D-CO], Sen. Britt, Katie Boyd [R-AL], Sen. Wyden, Ron [D-OR], Sen. Cassidy, Bill [R-LA], Sen. Durbin, Richard J. [D-IL], Sen. Murkowski, Lisa [R-AK], Sen. Cramer, Kevin [R-ND], Sen. Boozman, John [R-AR], Sen. Heinrich, Martin [D-NM], Sen. Hoeven, John [R-ND], Sen. Alsobrooks, Angela D. [D-MD], Sen. Blunt Rochester, Lisa [D-DE], Sen. Kaine, Tim [D-VA], Sen. Schiff, Adam B. [D-CA], Sen. Cortez Masto, Catherine [D-NV], Sen. King, Angus S., Jr. [I-ME], Sen. Rosen, Jacky [D-NV], Sen. Shaheen, Jeanne [D-NH], Sen. Warren, Elizabeth [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Moran, Jerry [R-KS]

Recent Actions

2026-02-26: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
2026-02-26: Introduced in Senate

Bill Versions

Access to Fair Financing for Opportunity and Resilient Development Act — issued 2026-02-26 — PDF (20 pages)