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The Quiet Shuttering of a Main Street Lending Program Will Make Inequality Worse
What looks like administrative housekeeping represents the dismantling of one of the most effective tools the federal government ever created to help working people and local economies build wealth.
Oct 15, 2025
Buried in the government shutdown is a decision that has nothing to do with budgets and everything to do with what government is for. Amid the political theater and arguments over spending priorities, one of the first casualties appears to be the Community Development Financial Institutions Fund. The Treasury Department has eliminated the entire staff of the program that, for three decades, delivered capital to Main Street instead of Wall Street and did it profitably.
The news has barely registered. In the hierarchy of shutdown crises, a federal lending program with a bureaucratic name ranks somewhere below furloughed workers and closed monuments, well beneath the spectacle of masked agents patrolling streets and entire zones flooded by federal enforcement. A program that helped people build wealth for 30 years disappears with less attention than a single day of border theater.
This is precisely the problem. What looks like administrative housekeeping represents the dismantling of one of the most effective tools the federal government ever created to help working people and local economies build wealth.
Understanding what we have lost requires understanding what the fund actually did, which is harder than it sounds because the work was so determinedly practical. The CDFI Fund began in 1994, in that brief Clinton-era window when both parties still pretended to care about the specific geometry of American inequality, not inequality as an abstraction to be lamented or celebrated, but the actual spatial reality of capital disappearing from entire regions of the country.
The message reads clearly: Certain people, certain places, are not worth the investment, no matter how small, no matter how effective.
By the early 1990s, the mechanics of abandonment were clear. Banks had discovered they could make more money financing suburban developments and corporate mergers than lending to the people who actually lived in Flint or Pine Ridge or the Mississippi Delta. Redlining had been illegal for decades, but you didn't need explicitly racist policies when you had risk models that just happened to define entire communities as unprofitable. The result was a map of America divided into places where credit flowed freely and places where it had stopped flowing at all.
The CDFI Fund offered a simple solution: seed money for local lenders who were willing to do the work that big banks had abandoned. These were credit unions, community development banks, and loan funds that knew their borrowers personally, understood the local economy's rhythms, and had better repayment rates than many commercial lenders precisely because they were not trying to jam every applicant through the same algorithm. The fund's proposition was straightforward. If the federal government absorbed some of the early risk, the cost of building institutional capacity, the uncertainty of lending in disinvested markets, private capital would follow. And it did. For every federal dollar invested, roughly eight more came from private banks and investors. This was market making in places the market had written off.
Over 30 years, the program quietly assembled a record that should have made it politically untouchable. Affordable homes built or financed. Hundreds of thousands of small businesses and farms kept afloat or launched. Grocery stores in food deserts. Rural health clinics. Childcare centers that allowed parents to work. The fund's annual budget remained microscopic by federal standards, less than one-tenth of 1% of federal spending, a rounding error in the defense budget, less than we spend in an afternoon on interest payments on the national debt.
Two-thirds of the money went to rural and small-town America, the places we are endlessly told have been forgotten by coastal elites and federal bureaucrats. In West Virginia and Oklahoma and Mississippi, the CDFI Fund was often the only source of affordable capital for people trying to start a business or expand a farm. When the pandemic hit and the big banks utterly failed to deliver Paycheck Protection Program loans to actual small businesses, CDFIs stepped in and moved billions in relief to the people who needed it. A Republican Congress allocated more than $12 billion to the program in 2020 because the work was so obviously effective that even in a moment of total partisan fracture, both sides could see it.
The decision to eliminate the fund during a shutdown allegedly about fiscal discipline becomes genuinely difficult to parse on any rational level. A credit union helping a farmer in rural Oklahoma buy equipment qualifies as essential economic infrastructure. A small business owner in Alabama repairing a roof with an affordable loan represents exactly the kind of entrepreneurship politicians claim to champion. The fund financed the least ideological activity imaginable: commerce. Loans for tractors and storefronts and roofs. Yet treating this program as expendable serves a purpose. It transforms practical infrastructure that helps people build equity and create jobs into something that can be discarded without having to reckon with what is actually being destroyed.
What we are watching represents a category error elevated to governing philosophy. The people eliminating the CDFI Fund claim to be advancing a vision of limited government, of returning power to communities, of letting markets work without federal interference. The fund embodied that vision. It was small, disciplined, and targeted. It did not replace markets; it created the conditions for markets to function in places they had abandoned. It rewarded work and ownership and entrepreneurship, all the things conservative politicians claim to revere. It did this while leveraging massive amounts of private capital, proving that government and markets could be partners rather than adversaries. If you actually believed in the rhetoric of small but effective government, the CDFI Fund would be the model you built outward from.
If the CDFI Fund stays dead, we will have chosen a particular vision of what government is for, and it is a grim one. Government becomes landlord and cop, the entity that collects and enforces but does not build.
We are not cutting the Fund because it failed. We are cutting it because its success exposes the incoherence of what "small government" has come to mean. The government continues to expand in all the ways that involve surveillance, enforcement, and punishment. What shrinks is the part of government that lends, that invests, that takes on risk so that private actors will follow. We keep the agencies that police and audit and deport, and we eliminate the ones that help a mechanic in rural Alabama buy the shop where he works or finance a grocery store on a South Dakota reservation so families do not have to drive 40 miles for food. This represents a preference for a government that extracts over one that builds.
The people who will pay for this are the people who have been paying for decades of policy designed in their name but against their interest. The CDFI Fund served exactly the communities that elected the politicians now calling it unnecessary: working-class families in regions gutted by globalization and bank consolidation, small towns where the factory closed and nothing replaced it, Native communities where the nearest bank branch is an hour away. These are places that have been told again and again that the market will provide, that government is the problem, that they need to be self-reliant. Then when a program appears that actually helps them be self-reliant, that gives them access to the capital they need to own rather than rent, to build rather than wait, it gets swept away. The cruelty here compounds itself. The message reads clearly: Certain people, certain places, are not worth the investment, no matter how small, no matter how effective.
The damage will unfold in the way that budget cuts always do: slowly, locally, in ways that do not generate headlines. Hundreds of CDFIs have pending applications for 2025 funding. Those awards form the core of operating budgets, the money that allows these institutions to lend at all. Without them, a developer planning affordable housing will lose financing and cancel the project. An entrepreneur will give up on expanding. A family that could have afforded a home will keep renting. None of these qualify as catastrophic failures in isolation. They accumulate. They compound. They are the small subtractions that, over years, transform a place from one that still believes in its future to one that has accepted its managed decline.
When those places continue to hollow out, when the remaining jobs disappear and the young people leave and the buildings crumble, the same politicians who eliminated the tools that might have helped will return with explanations that conveniently blame everyone except themselves. It will be the fault of cultural decay or moral failure or not trying hard enough. No one will acknowledge that we made a choice to defund the institutions that helped people build, while preserving and expanding the ones that punish. This represents the con at the heart of the current discourse about government: We dismantle the programs that work, watch the predictable failures that follow, and then use those failures as evidence that government cannot work. The prophecy fulfills itself as discovery.
The CDFI Fund's elimination also clarifies something uncomfortable about how we talk about economic policy in this country. We have entire industries built around helping wealthy people and large corporations access capital: carried interest loopholes, opportunity zones, tax credits for real estate development, subsidies for industries that have not needed them in decades. We have a Federal Reserve that will move heaven and Earth to ensure that financial markets have liquidity. A program that helps working people access a fraction of that capital, that creates actual jobs and ownership in places the market has abandoned, gets deemed expendable. The asymmetry reveals who the economy is designed to serve and who it is designed to exclude.
There is a broader pathology here about what kind of government we are willing to tolerate. We accept, without much controversy, a national security apparatus that costs nearly a trillion dollars annually. We accept a carceral system that incarcerates more people than any other nation on Earth. We accept subsidies for fossil fuel companies and tax breaks for private equity firms. The idea that government might invest a few hundred million dollars to help small businesses in struggling towns access loans somehow becomes a bridge too far. The issue concerns what we are spending on. We have built a state that is very comfortable exercising power over people and very uncomfortable helping them.
If the CDFI Fund stays dead, we will have chosen a particular vision of what government is for, and it is a grim one. Government becomes landlord and cop, the entity that collects and enforces but does not build. Government gives up on the idea that policy can be a tool for shared prosperity rather than just a mechanism for distributing the gains to those already winning. This transcends left or right, progressive or conservative. We either believe that people who work for a living in places the market has forgotten deserve a chance to build something, or we have decided that some places and some people lie beyond reach and should be left to fend for themselves in an economy that has made clear they are surplus.
When the shutdown ends, and it will end, because these things always end, Congress will face a choice. It can restore the CDFI Fund quickly and with enough resources to make up for lost time, or it can let this become permanent, another small program that vanished in the chaos and never came back. The decision will reveal whether any of the rhetoric about helping working people and reviving struggling communities was ever sincere, or whether it was always just performance.
The CDFI Fund proved for 30 years that a mechanic in Alabama buying his shop and a grocery store serving a South Dakota reservation are worth a federal investment, that the work of building and lending can succeed when government chooses to be a partner rather than an overseer. Its elimination announces we have made a different choice. The real casualty of this shutdown will outlast whatever budget deal finally ends it. It will be measured in the homes not built, the businesses not started, the communities that stopped believing they were worth investing in. That loss has already begun.
If you believe the CDFI Fund should be restored, you can sign and share this petition. It will be shared with members of Congress on October 17.
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Trump's Military Occupation of DC Egged On by Corporate Lobbyists: Report
In some cases, corporate groups have posed as small business owners besieged by rising crime rates.
Aug 13, 2025
U.S. President Donald Trump's military occupation of Washington, D.C. has been egged on for months by corporate lobbyists. In some cases, they have posed as small business owners besieged by rising crime rates.
According to a report Tuesday in The Lever:
Last February, the American Investment Council, private equity's $24 million lobbying shop, penned a letter to D.C. city leaders demanding "immediate action" to address an "alarming increase" in crime.
That letter was published as an exclusive by Axios with the headline: "Downtown D.C. Business Leaders Demand Crime Solutions."
But far from a group of beleaguered mom-and-pops, the letter's signatories "included some of the biggest trade groups on K Street," The Lever observed:
The U.S. Chamber of Commerce, which boasts its status as the largest business organization in the world; the National Retail Federation, a powerful retail alliance representing giants like Walmart and Target; and Airlines for America, which represents the major U.S. airlines, among others. These lobbying juggernauts spend tens of millions of dollars every year lobbying federal lawmakers to get their way in Washington."
It was one of many efforts by right-wing groups to agitate for a more fearsome police crackdown in the city and oppose criminal justice reforms.
On multiple occasions, business groups and police unions have helped to thwart efforts by the D.C. city council to rewrite the city's criminal code, which has not been updated in over a century, to eliminate many mandatory minimum sentences and reduce sentences for some nonviolent offenses.
The reforms were vetoed by D.C. Mayor Muriel Bowser in 2023. After the veto was overridden by the city council, Democrats helped Republicans pass a law squashing the reforms, which was signed by then-President Joe Biden.
In 2024, groups like the Chamber of Commerce pushed the "Secure D.C." bill in the city council, which expanded pre-trial detention, weakened restrictions on chokeholds, and limited public access to police disciplinary records.
At the time, business groups lauded these changes as necessary to fight the post-pandemic crime spike D.C. was experiencing.
But crime rates in D.C. have fallen precipitously, to a 30-year low over the course of 2024. As a press release from the U.S. attorney's office released on January 3, 2025 stated: "homicides are down 32%; robberies are down 39%; armed carjackings are down 53%; assaults with a dangerous weapon are down 27% when compared with 2023 levels."
Nevertheless, as Trump sends federal troops into D.C., many in the corporate world are still cheering.
In a statement Monday, the D.C. Chamber of Commerce described itself as a "strong supporter" of the Home Rule Act, which Trump used to enact his federal crackdown.
The Washington Business Journal quoted multiple consultancy executives—including Yaman Coskum, who exclaimed that "It is about time somebody did something to make D.C. great again," and Kirk McLaren who said, "If local leaders won't protect residents and businesses, let's see if the federal government will step in and do what's necessary to create a safe and prosperous city."
Despite crime also being on the decline in every other city he has singled out—Los Angeles, Baltimore, Oakland, New York, and Chicago—Trump has said his deployment of federal troops "will go further."
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Trump's Big Bill Is Not-So-Beautiful for Small Businesses
In a recent survey of 574 small business owners, 7 of 10 opposed the spending cuts in H.R. 1.
Jun 30, 2025
U.S. President Donald Trump's One Big Beautiful Bill Act, H.R. 1, is a dream of tax cuts for corporations and the wealthy. However, the same bill now on the floor of the Senate is also a loaded gun of healthcare spending cuts aimed at the American people, 11.8 million of whom could lose their coverage by 2034, according to the nonpartisan Congressional Budget Office.
Some of these Americans are mom-and-pop entrepreneurs. Dr. Alexia McClerkin owns The Wellness Doc in Houston, Texam. She can't afford to buy herself health insurance and relies on Medicaid for her three sons' coverage. Dr. McClerkin has a bird's-eye view of how her patients cope with paying their healthcare bills.
Doug Scheffel is president of ETM Manufacturing in Littleton, Massachusetts. Two of his employees rely on state health exchanges. Other employees of Scheffel are care providers for family members receiving Medicaid.
Over half, or 52%, of responding small business owners stated that climbing healthcare insurance harms their bottom lines.
In a recent survey of 574 small business owners, 7 of 10 opposed the spending cuts in H.R. 1 that seeks to extend the 2017 Tax Cuts and Jobs Act. According to this Small Business for America's Future (SBAF) survey, 27% support the healthcare cuts in H.R. 1, the One Big Beautiful Bill Act, and 5% are not sure.
This SBAF survey found that 58% of small businesses have owners, employees, or family members who rely on Medicaid, healthcare that covers the disabled, elderly, and low-income Americans, or Children's Health Insurance Program (CHIP coverage), low-cost or free care for kids in families whose annual income disqualifies them from Medicaid, an alternative to unaffordable private healthcare insurance.
According to the SBAF survey, 56% of respondents themselves, their employees, or family members use Affordable Care Act (ACA) Marketplace coverage with premium tax credits set to expire that are not extended in the H.R. 1 legislation. Over half, or 52%, of responding small business owners stated that climbing healthcare insurance harms their bottom lines.
"Small businesses cannot afford to be shut out of access to affordable healthcare. Medicaid, CHIP, SNAP, and enhanced ACA premium tax credits are lifelines for small business, their families, and their workers," said Sen. Ed Markey (D-Mass.) in a written statement. "If Republicans gut these programs or allow them to expire, healthcare costs for small businesses and their families will skyrocket, employees will lose coverage, and entrepreneurs will be stifled. We must expand access to health coverage for all, especially small businesses."
A policy alternative for universal health coverage is Medicare for All. However, passing such legislation through Congress for the president to sign faces stiff opposition from the healthcare industry. It has been successful in blocking Medicare for All.
"Small business owners have been crying out for relief from crushing healthcare costs for years, and Congress' response is to make it worse," said SBAF co-chair Walt Rowen, owner of Susquehanna Glass Company in Columbia, Pennsylvania, in a statement. "These cuts don't solve problems—they shift costs from government programs onto the businesses least able to absorb them, all while extending tax breaks for corporations that already pay lower effective rates than the corner store."
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