Following a motion for a temporary restraining order filed yesterday by CAMEO Network and Inclusive Action for the City with the support of Democracy Forward, today the Treasury Department exercised its authority to guarantee approximately $200 million in bonds, hours before that authority would have expired at midnight. Plaintiffs filed their action in mid-August and sought a preliminary injunction requiring the Treasury Department, Community Development Financial Institutions (CDFI) Fund, and Office of Management and Budget to obligate awards and exercise guaranty authority to provide hundreds of millions of dollars in financial support to CDFIs across the country – before congressional authorization expired on September 30.
This development marks the second fast-breaking reversal by the Treasury Department in the past several days. On September 28, the CDFI Fund provided a declaration attesting that approximately $289 million in awards had been obligated as the plaintiffs had demanded in an earlier motion for preliminary injunction. That victory contradicted the government’s prior assertion, made in this litigation, that obligating those funds would be “unreasonable” and “impossible” to achieve “lawfully” before September 30.
“We are pleased to see that $500 million dollars will be making its way to communities across the country that need it the most,” said Carolina Martinez, CEO of CAMEO Network. “The winners in this scenario are small businesses, housing, childcare, community clinics – all investments that contribute to economic growth. ”
“This victory is the latest in our continuing effort to hold the federal government accountable to meet its legal obligations to America’s small businesses and the CDFI organizations that serve them,” said Doug Smith, Vice President of Policy and Legal Strategy, Inclusive Action for the City. “We’re glad to see that our litigation is unlocking hundreds of millions of dollars that will bolster community investment and strengthen our neighborhoods.”
Today’s exercise of guarantee authority adds approximately $200 million in liquidity available to the CDFI industry. Treasury’s exercise of the authority has occurred one day after plaintiffs filed a motion seeking a temporary restraining order to compel action or suspend the expiration of the statutory deadline for Treasury to act.
Treasury’s announcement that it would exercise its authority to guarantee bonds, as is statutorily required, marks another significant milestone in a legal challenge brought by a coalition of economic development groups that sued to stop Treasury and the Office of Management and Budget (OMB) from unlawfully withholding the funds.
The motion for a temporary restraining order, filed yesterday in the Northern District of California, comes in a case filed in August by CAMEO Network and the Los Angeles-based Inclusive Action for the City, and asked a court to act to prevent the irreversible expiration of the authority to guarantee bonds under the CDFI Bond Guarantee Program. The authority to guarantee bonds for fiscal year 2026 expires at the end of the day on September 30, 2026. Democracy Forward represents the plaintiffs in this case.
The CDFI Bond Guarantee Program provides CDFIs access to a significant source of capital. By providing 100% guarantees of bonds issued by certain qualified bond issuers, the CDFI Bond Guarantee Program injects new and substantial capital into some of the nation’s most economically distressed communities. In fiscal year 2026, approximately $200 million in bond guarantee authority was sought by applicants to the program. Treasury’s September 30 approval of those applications commits it to exercising the full amount of guarantee authority sought by those applicants.
Treasury’s announcement that it was acting on the pending Bond Guarantee Program applications follows the full release of congressional appropriated funding for the CDFI program. Last week, the CDFI Fund’s Director said in a sworn declaration that he “anticipate[d] that nearly the full amount of Fiscal Year 2025 CDFI program funding” – approximately $288,992,757 of $289,000,000 outstanding – “will be obligated by close of business on September 23, 2026,” or one day before a scheduled hearing on the coalition’s motion for emergency relief. At that, as well as subsequent hearings, the court highlighted the CDFI Fund’s Bond Guarantee Program, a program that authorizes the Secretary of the Treasury to guarantee bonds issued by CDFIs up to $500,000,000, and the plaintiffs submitted an amended complaint shortly after the hearing, as well as a request for a temporary restraining order. Treasury’s action today responds to that latest request.
“Today’s announcement is welcome relief for the small businesses in underserved communities across the country that rely on bonds issued by CDFIs as a crucial lifeline that help neighborhoods thrive,” said Skye Perryman, President and CEO of Democracy Forward. “We are honored to represent our clients in their challenge to get the administration to release crucial CDFI funding and bonds, and we will remain vigilant to ensure the administration has met its obligations and that the Treasury Department administers these awards and bonds lawfully.”
Background
In the mid-1990s, a bipartisan Congress established the Treasury Department’s CDFI Fund, creating a source of federal support for community lenders that serve people, businesses, and communities that traditional lenders often fail to serve. Throughout three decades, bipartisan Congresses have consistently appropriated money for the CDFI Fund, which has financed more than $270 billion in small business loans, housing, community clinics, and other community investments between 2005-2023. The funding has built the capacity of more than 1,400 certified CDFIs operating in all 50 states, the District of Columbia, Guam, and Puerto Rico. More than that, CDFIs are critical to broader community investment, including expanding affordable housing, healthcare, and childcare that serves families and communities.
Funding for CDFIs came under threat in May 2025, when the president’s budget asked Congress to eliminate the CDFI Fund’s discretionary award programs outright. Congress rejected the proposed cuts and appropriated $324 million for fiscal year 2026, the same amount that it appropriated in fiscal year 2025. Congress further barred the use of any appropriated funds to “increase, eliminate, or reduce funding for a program, project, or activity as proposed in the president’s budget request” unless Congress itself enacts that change.
Still, the Trump-Vance administration persisted in unlawful efforts and ignored Congress’ clear directives by withholding all of the money Congress appropriated for CDFI award programs, which is supposed to reach CDFIs and the communities they serve. At the time the case was filed, CDFI Fund award announcements had not been made, threatening hundreds of millions of dollars in investment for CDFIs nationwide as the fiscal year 2025 appropriation expires on September 30, 2026. Though Treasury announced it intended to release the funds, the announcement does not resolve the case, which includes claims concerning over $1 billion more in CDFI funds from other fiscal years, including fiscal year 2026, that Congress appropriated, but the administration continues to block.
The case is Inclusive Action for the City and CAMEO Network v. U.S. Department of the Treasury et al and the Democracy Forward’s legal team involved in this case includes Andrea Matthews, Anna Deffebach, Hanna Hickman, Steven Bressler, and Elena Goldstein.