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A business advocacy group representing community lenders sued the U.S. Treasury Department on Monday, seeking to prevent $289 million in congressionally appropriated funding for Community Development Financial Institutions from expiring at the end of the fiscal year.
The Washington-based Freedom Economy Business Association filed the complaint in U.S. District Court for the District of Columbia. The group alleges Treasury unlawfully failed to obligate and distribute fiscal 2025 CDFI funding approved by Congress.
The allegations have not been adjudicated. Treasury did not respond to Reuters’ request for comment on the lawsuit.
Sept. 30 deadline puts the funding at risk
Treasury announced CDFI awards on Sept. 15, but according to the lawsuit and Reuters, recipients had not been identified and the funds had not yet been obligated. The fiscal 2025 money is at risk of expiring when the federal fiscal year ends Sept. 30.
The plaintiffs are asking the court to order Treasury and the Office of Management and Budget to distribute the funds before the deadline. They are also seeking a temporary restraining order intended to prevent the government from allowing the funding authority to expire while the dispute is pending.
The group also wants Treasury to move forward with an additional $289 million appropriated by Congress for fiscal 2026.
Bloomberg Law separately reported the new lawsuit Monday, describing it as another legal challenge over delays in distributing the community-lender funding.
Why the dispute matters to housing
CDFIs provide financing in underserved markets for purposes that include affordable housing, small businesses and community development. Treasury’s Office of Community and Economic Development oversees the CDFI Fund as part of its community finance and affordable housing work.
The dispute comes after another lawsuit filed in August by Inclusive Action for the City and CAMEO Network over the same $289 million in fiscal 2025 appropriations. Those plaintiffs have said Treasury’s Sept. 15 announcement did not guarantee that the full appropriation would be distributed before the deadline.
Treasury has also been reviewing certified CDFIs for compliance with applicable law and program requirements. In an April announcement, Treasury Secretary Scott Bessent said CDFIs play a critical role in expanding access to capital in underserved communities while saying the department would strengthen oversight of federal grant programs.
The new case adds pressure as the Sept. 30 deadline approaches. Counsel for Freedom Economy told Reuters the group expects a court response within 48 hours.
Sources: Reuters; Bloomberg Law; U.S. Department of the Treasury.
Photo: Vihan Dalal/Unsplash.
