Trump administration begins to abolish CDFI Fund during government shutdown amid other layoffs

The Trump administration is moving forward with a reduction in force at the Treasury Department’s Community Development Financial Institutions (CDFI) Fund during the ongoing government shutdown.

The program is designed to support community-based lenders that serve low-income and underserved areas. 

The administration has reportedly sent about 4,000 layoff notices across multiple federal agencies. 

Russell Vought, head of the Office of Management and Budget (OMB), confirmed Friday on social media that layoffs across the federal government are underway.

American Banker reported on internal documents showing that Treasury has initiated steps to abolish the CDFI Fund, citing a determination that its operations do not align with President Trump’s policy priorities and agenda. The layoffs will reportedly take effect in mid-December.

Critics have described the fund as corporate welfare.

“The [Reduction in Force] is necessary to implement the abolishment of the Community Development Financial Institutions (CDFI),” the notices read.

The plan to eliminate the fund builds on an executive order that was issued earlier this year that sought to dismantle the fund "to the extent statutorily allowed." 

Treasury Secretary Scott Bessent pushed back, noting that all CDFI programs are mandated by law and cannot be abolished unilaterally through executive action alone, according to a memo to OMB reviewed by American Banker, 

Vought has argued for using so-called “pocket rescissions,” which is a budgetary tactic where the administration proposes cuts to programs late enough in the fiscal year that Congress lacks the 45 session days required to intervene and respond. 

Last month, Treasury released a supplemental application process for institutions to access previously appropriated funds, which came with some changes, including removal of climate-related initiatives from eligibility, and references to race or ethnicity no longer considered criteria for receiving funds.

Applications for the funding under the revised guidelines are due October 27 but the government shutdown could have an impact on that deadline.