Federal: Support Letter for the Promoting and Advancing Communities of Color Through Inclusive Lending Act

October 1, 2024

The Honorable Maxine Waters

U.S. House of Representatives

Washington, DC  20515

Re:       The American Fintech Council’s Support of the Promoting and Advancing Communities of Color Through Inclusive Lending Act

Dear Ranking Member Waters,

On behalf of our members,^[1] the American Fintech Council (AFC) writes to extend our support for the Promoting and Advancing Communities of Color Through Inclusive Lending Act (the Act).

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by fostering responsible innovation in financial services and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies, particularly low- and moderate-income (LMI) consumers and those from communities of color. Our members are also improving access to financial services and increasing overall competition in the financial services industry by supporting the responsible growth of lending and lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable financial products.

AFC recognizes the crucial role that community development financial institutions (CDFIs) and minority depository institutions (MDI) play in providing lending services to LMI and communities of color. However, as noted by the U.S. Government Accountability Office (GAO) in its 2024 report “many small CDFIs and MDIs reported they lack the technology needed to provide online services or to underwrite loans, manage operations, and conduct outreach more efficiently” and that, in turn, this “constrains their ability to serve underserved communities”^.[2]  While AFC concurs with the GAO’s recommendation for the Department of the Treasury to develop training and other materials to improve CDFI’s technology capacity, we believe that legislative action is needed to remedy this issue.  

AFC fully supports the aims of the Act, particularly its provisions focused on supporting improvements to the technological capabilities of CDFIs and MDIs through partnerships with fintech companies. Further AFC agrees with the Act’s effort to establish a technology grant program to be administered by the Department of the Treasury to address the technology challenges impacting these institutions. These provisions represent a concerted effort to encourage responsible innovation for the benefit of historically underserved communities in a manner that will ensure the long-term viability of these institutions.

The Act’s central goal of developing reforms to support CDFIs and MDIs to promote inclusive lending practices to communities of color and improve their technological capabilities mirrors the efforts conducted by AFC members. For example, through the development and implementation of responsible innovations, AFC member and CDFI, Oportun, has been able to serve millions of LMI and Latino borrowers with responsible and affordable installment loans. These consumers came to Oportun without credit scores but were able to access the credit they needed due to Oportun’s long-standing commitment to its community and the use innovative technologies to expand credit access.

In fact, as part of its commitment to the community, Oportun decided to support fellow CDFIs upon Oportun’s IPO in 2019. Since its IPO, the company has provided millions in low-cost financing to fellow CDFIs in partnership with the Opportunity Finance Network to fuel their lending in support of the communities that have been historically underserved.

Thus, AFC encourages the Congress to take action on the Act to progress the critical efforts of improving CDFI and MDI lending and the overall expansion of inclusive lending activities in the financial services industry through the use of responsible innovations. AFC believes that, if done effectively, innovations developed for and implemented by CDFIs and MDIs can categorically improve the financial health of communities of color, thereby lessening the generational ills experienced by these communities due to a historical lack of access to financial services. Therefore, AFC and its members support this legislation and thank you for its reintroduction in the 118^th Congress.

Sincerely, 

Ian P. Moloney

SVP, Head of Policy and Regulatory Affairs

American Fintech Council

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[1] AFC’s membership spans community development financial institutions (CDFIs), Benefit Corporations, technology platforms, non-bank lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.

[2] U.S. Government Accountability Office, Economic Development: Additional Training Could Help Small Lenders Implement Technology, GAO-24-106226 (Mar. 28, 2024) available at https://www.gao.gov/products/gao-24-106226.