House Appropriations Subcommittee on Financial Services and General Government Chair Jo Ann Emerson (R-MO) introduced H.R. 2434, the Financial Services and General Government Appropriations Act, on July 7. This FY12 appropriations bill sharply reduces funding for the Community Development Financial Institutions (CDFI) Fund and would eliminate funding for Treasury’s Home Affordable Modification Program (HAMP).
Overall, the bill would appropriate $19.9 billion for FY12, nearly $2 billion below FY11 and nearly $6 billion below the President’s FY12 request. The bill includes funding for the Department of Treasury and several other agencies.
The bill would reduce funding for the CDFI Fund to $183 million for FY12, $44 million less than both FY11 and the President’s FY12 budget request. CDFI, a Department of Treasury program, provides credit, capital, and financial services to low and moderate income populations.
The bill would also eliminate HAMP, another Treasury program, which helps homeowners struggling financially avoid foreclosure by providing mortgage servicers with financial incentives to modify first mortgages.
In a June 23 press release, Appropriations Committee Chairman Hal Rogers (R-KY) cited the bill as a good example of reining in deficits and cutting spending in order to create jobs and help balance the budget.
On July 12 the Administration published a Statement of Administration Policy (SAP) expressing serious concerns with the bill. The Administration opposes the reduction in CDFI funding, stating that cuts would limit the program’s ability to provide much-needed financial services to underserved communities. The Administration also praises HAMP’s success in standardizing the treatment of delinquent home loans, and opposes terminating the program because doing so would increase the number of avoidable foreclosures. The SAP states that a bill undercutting investments key to economic growth and job creation risks a presidential veto.