As Esteban Camargo reported last week, the Community Development Financial Institutions (CDFI) fund was left in limbo these last few weeks, following the Executive Order signed on March 14, aimed at further reducing the size of the federal government. The vague wording of the order cast doubt over what was considered statutory—and therefore, permissable—and what would need to be cut.
With 11 CDFI programs potentially on the chopping block for two weeks, low-income credit unions across the country who rely on the CDFI fund to serve their members were left wondering what these changes would mean to their ability to meet the needs of their communities. Thankfully, the uncertainty did not last too long, as the Treasury Department confirmed to the Office of Management and Budget (OMB) late last week that all 11 CDFI programs, including the CDFI Program, Small Dollar Loan Program, the Certification of CDFIs and Community Development Entities, and more, are indeed statutory.
In the report, the department protected the fund but did not rule out future changes, noting the department will continue to “evaluate” it. The report stated, “Accordingly, the CDFI Fund is performing its statutory functions as required by law.” It continued on to say that, “On an ongoing basis, the Treasury will evaluate the CDFI Fund to identify opportunities for improvement and enhance efficiencies.”
Despite the open-endedness of the report, which leaves room for future cuts, this news comes as a great relief to the industry, as CDFI-designated credit unions are critical institutions that meet the needs of low-income communities and boost the economy of those areas. As America’s Credit Union’s Chief Advocacy Officer Carrie Hunt stressed in recent meetings with the OMB, these institutions generate $12 of private capital for every $1 of federal money they are awarded.
In response to the report, America’s Credit Unions President and CEO Jim Nussle issued a statement thanking the Treasury for backing the CDFI and reaffirming the importance of these programs.
“America’s Credit Unions is pleased Treasury confirmed to OMB that all 11 CDFI programs are statutory and listened to our feedback on how important the programs are to communities across America. With over 500 CDFI-certified credit unions, it reflects the industry’s mission of providing safe and secure financial services so millions of people can achieve financial well-being,” Nussle said. “America’s Credit Unions is not letting the foot off the gas and will continue to engage with the White House, Treasury, and other stakeholders so that families can reach their American Dream in a prosperous economy.”
With the CDFI fund seemingly safe for now, America’s Credit Unions is turning its attention back to the credit union tax exemption issue. However, credit unions can rest assured that eyes and ears will remain on the fund for any future changes that may come down the pipeline.
