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Congress should increase funding for the Community Development Financial Institutions program and make it easier for credit unions and banks to become certified, Jeanne Kucey, chief executive officer of the JetStream Federal Credit Union told a Senate Subcommittee Wednesday.
“It is this program that gives credit unions like JetStream an important resource to help create programs to serve their communities,” Kucey, who was representing the National Association of Federally-Insured Credit Unions, told the Senate Financial Services and Consumer Protection Subcommittee. Kucey’s credit union is headquartered in Miami Lakes, Fl. and has more than $250 million in assets.
Kucey added, “In addition to helping credit unions in low-income areas serve members in need, the CDFI program gives credit unions access to funds that they are not able to raise from the capital markets.”
She asked senators to ensure that the CDFI program receives additional funding in the FY22 appropriations bills, which are now being negotiated.
The Biden Administration has proposed increasing CDFI funding to $330 million, the same amount that was included in the House-passed version of the Financial Services funding measure. Senate Democrats proposed providing the program with $360 million. Congress has not yet completed its FY22 appropriations measures.
Kucey also asked members of Congress to ensure that the Treasury Department is given necessary resources to clear the current CDFI application backlog.
“As the number of credit unions applying to become CDFI designated institutions continues to grow, many applicants have seen the application process drag on as they await approval,” Kucey said. She added that NAFCU supports legislative measures to streamline and modernize the CDFI application process.
However, Joe Griffith, a research fellow in financial regulations at the conservative Heritage Foundation, said the CDFI program is a failure. “More government investment in CDFIs will fail to yield consistent increases in employment,
wages, or advances to general economic opportunity for those who have been left behind,” Griffith told the subcommittee. He added that CDFI funding often amounts to corporate welfare, adding that there is a lack of transparency in the program.
Subcommittee Chairman Sen. Raphael Warnock, D-Ga., said CDFI institutions “provide economic stability and certainty to millions of Americans.”
The panel’s ranking Republican, Sen. Thom Tillis of North Carolina, complained that the Treasury Department does not provide enough data to judge the success or failure of the program. “It is crucial that policymakers are equipped with concrete data,” he said.
Along those lines, Senate Banking Committee ranking Republican Sen. Pat Toomey of Pennsylvania sent a letter to the Government Accountability Office asking the GAO to evaluate the CDFI program. “Given the unprecedented amounts of taxpayer resources Congress directed to Treasury, CFDIs, and MDIs for pandemic response, it is vital policymakers know how effective these programs have been in helping to revitalize distressed areas and fill any gaps in access to credit for small businesses, as the program was originally intended to do,” he wrote in his letter.