Trump’s Latest Executive Order Puts Rural Community Banks at Risk | Opinion

An executive order President Donald Trump signed on Friday, calling for the federal Community Development Financial Institutions (CDFI) Fund and other agencies to be “eliminated,” targets the economic lifeblood of America’s rural communities.

When big banks turn away from small towns and rural communities—finding them unprofitable to serve—community banks step in to provide the credit and capital that families and small businesses desperately need. For three decades, many of these community banks have depended on the CDFI Fund, which enables them to serve the economically distressed communities that Wall Street won’t lend to.

Consider DeWitt, a rural city in Iowa’s easternmost county, which hugs the Illinois border and the Mississippi. Home to just over 5,500 people, the city is small but burgeoning. Since 2000, it’s grown the most out of the 14 municipalities in Clinton County. Its high school, Central DeWitt, brings in students from neighboring Grand Mound, Low Moor, and Welton. And the county’s annual Tailgate N’ Tallboys summer festival brings in stars like Tim McGraw, Jason Aldean, and Jelly Roll.

It’s not New York City or Chicago or even Des Moines; it’s rural America. But even there, in a typical year before COVID-19, every other day, a family in the county received an eviction notice. When the pandemic hit, building affordable housing to help these families became even harder. Interest rates kept climbing. Lumber, steel, and concrete prices soared. In November 2022, Central Bank of Kansas City, a community bank, stepped in, providing $6.8 million in financing for the development of 36 new housing units in DeWitt—all of which were reserved for families making less than the area’s average income.

Community banks like these are vital to helping rural America solve economic challenges—from financing affordable housing to providing mortgages, small business loans, and agricultural loans. Today, they make up 72 percent of all bank branches in rural America. But they have been at risk for years, and now face a direct threat in the president’s executive order.

From 2000 to 2020, the number of banks in America plummeted from 8,315 to 4,277, due in large part to increased concentration in the banking sector. As the number of banks closed, so did the number of bank branches. More than 2,000 closed shop in rural America during those two decades. The president’s attempted gutting of the CDFI Fund will only exacerbate this trend, hindering community banks from accessing federal support.

WASHINGTON, DC – MARCH 06: U.S. President Donald Trump speaks as he signs executive orders in the Oval Office of the White House on March 06, 2025 in Washington, DC.
WASHINGTON, DC – MARCH 06: U.S. President Donald Trump speaks as he signs executive orders in the Oval Office of the White House on March 06, 2025 in Washington, DC.
Alex Wong/Getty Images

Offering a range of resources, the CDFI Fund helps accredited financial institutions lend to individuals, families, and businesses that struggle to get access to credit or capital elsewhere. Just look at what it did with the 2021 Emergency Capital Investment Program (ECIP).

Through ECIP, the Treasury Department injected more than $8.5 billion into community banks—84 percent of which were accredited CDFIs—so they could lend in the rural areas, Tribal nations, and impoverished communities that big banks often ignore. In just 18 months, these community banks took those investments and used them to originate over $58 billion in loans for affordable housing development, new restaurants, child care and health care facilities, and more.

Over $10 billion of those loans went to rural communities. The Central Bank of Kansas City is an example of one CDFI that used this funding to help its local community. Another example is Southern Bancorp, a CDFI in Arkadelphia, Arkansas. This community bank leveraged its ECIP investment to make a $94,000 commercial loan for a family health care clinic in Ashley County, Arkansas—a county that ranks in the bottom quartile for health outcomes in a state that ranks near the bottom of the country. Importantly, this new facility provides transportation for low-income residents, addressing a common barrier to accessing care in sparse rural areas.

On the back of the ECIP investments, America experienced an unprecedented boom in small businesses. In 2024, Americans started more than 435,000 new businesses per month—a rate 81 percent faster than the decade preceding the pandemic. While CDFIs account for a fraction of the nation’s business lending, today they manage $304 billion in loans for more than 4.3 million businesses and 5,000 community centers, like child care centers and health care facilities.

It’s no wonder CDFIs have broad support. The Senate CDFI Caucus has bipartisan co-chairs in Senator Mark Warner (D-Va.) and Senator Mike Crapo (R-Idaho) and 28 total members split evenly by party. In recent years, a coalition of some of America’s largest companies—from Google to McKinsey to PayPal—pledged to collectively deposit more than $1 billion into CDFIs to enable greater lending.

It’s rare in Washington to have both bipartisan and private-sector backing. CDFIs have earned that support through their track record of success. President Trump’s chainsaw approach to the federal government now threatens these community banks—and the communities they serve. If, as he says, he truly believes in supporting the institutions that make America great, he should be supporting the CDFI Fund. As many of his Republican colleagues already know, CDFIs provide affordable financial services to millions of working families that helped put this president in office.

Samarth Gupta served at the Treasury Department during the Biden Administration. He’s a Rhodes Scholar and a graduate of Yale Law School.

The views expressed in this article are the writer’s own.

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