CDFI Fund advisory board shares CU concerns with proposed application

The Treasury’s Community Development Financial Institutions (CDFI) Fund’s Community Development Advisory Board (CDAB) met Monday, and its CDFI Certification Subcommittee provided several recommendations to the application process echoing credit union concerns and recommendations. CUNA and the National Association of Federally-Insured Credit Unions submitted a written statement in the weeks prior to the meeting outlining technical recommendations.

The CDFI Fund has paused applications while it finalized a new Certification Application.

The subcommittee highlighted many of the issues raised by the organizations during its Monday meeting, including:

• The proposed ability to repay rules repay may impair CDFIs’ flexibility in serving their communities, and instead recommended the CDFI Fund allow for narrative explanations.
• The development services definition is too narrow and excludes some activities that are critical and cost-effective.
• The financial interest policy would prohibit credit union members from accessing loans and remove client representation from boards, and should be reassessed.
• The certification requirements should not conflict with laws, such as the Equal Credit Opportunity Act, or prudential regulators’ policies and expectations.

CDAB members also echoed CUNA’s praise of the CDFI Fund’s efforts to ensure that the CDFI designation remains meaningful and reflective of the Fund’s mission. Several CDAB members also shared concerns that the proposed changes—as written—would have unintended consequences, such as negative impacts on Native and rural CDFIs, and that the lack of flexibility could create barriers to innovation to serve the underserved.