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CUNA and other organizations wrote to House Financial Services Committee, Senate Banking, Housing, and Urban Development Committee, and Senate Community Development Finance caucus leaders Tuesday with grave concerns over the proposed new Community Development Financial Institution (CDFI) certification application. The CDFI Fund proposed the new guidance Nov. 5 under the Paperwork Reduction Act (PRA).
“Specifically, we strongly believe that the proposed changes will significantly undermine the efforts of CDFIs to meet the needs of borrowers in low-income and distressed communities,” the letters read. “In addition, the scope of the proposed changes is broad enough that we believe implementing those changes through the PRA was procedurally inappropriate and did not allow for sufficient consideration of stakeholder feedback.”
The organizations note the proposed application and application guidance—which will go into effect in April 2023—constitute major policy changes with regard to which entities will be certified and eligible for federal funding.
“With this proposed policy overhaul, the CDFI Fund will radically reshape the CDFI industry. This new application and guidance will not simply flush out a few ‘bad apples.’ Mission-focused CDFIs with long track records of impact and quality service to low-income communities will be forced to make a painful choice,” the letters read. “Some will forgo CDFI certification and access to the CDFI Fund’s resources but continue to serve their communities, while others will maintain their CDFI certification at the expense of reductions in service and access to capital for CDFI Target Markets. We do not believe these choices should be inevitable, or forced by the CDFI Fund.”
CUNA previously submitted comments on the proposed certification application earlier this month, noting that the changes would inappropriately exclude “large swaths” of mission-focused credit unions.