Nussle: CDFI Fund Failing to Provide Crucial Certification Information
Credit unions need clarity on process, Nussle tells Congress
Two months after the Treasury Department released a new Community Development Financial Institutions Fund certification application, department officials still have not provided prospective CDFIs with crucial information, America’s Credit Unions President/CEO Jim Nussle told members of Congress this week.
“While the fund provided flexibility, clarity, and many changes to ensure that organizations that should be able to certify can, not all issues have been addressed,” Nussle wrote to members of the House Financial Services Committee and the Senate Banking Committee.
Treasury Secretary Janet Yellen testified before the House committee on Tuesday and is scheduled to testify before the Senate committee on Thursday. The hearings are centered on the annual report of the Financial Stability Oversight Council and not the CDFI program. Yellen was not asked any questions on the CDFI program at Tuesday’s hearing.
Nonetheless, Nussle wrote members of the committees this week raising several issues, including problems with the CDFI program.
The CDFI Fund released details about its new certification and application process in early December. Currently certified CDFIs will have until Dec. 20, 2024, to apply for recertification. Until then, they will maintain their eligibility for the program. Prospective CDFI’s will use the new application.
Nussle wrote that fund officials have not yet released the CDFI Certification Agreement that all institutions must sign in order to obtain certification. “This agreement absolutely must be read in order for organizations interested in certifying or recertifying to have a full understanding of the obligations associated with certification and the process that will happen should they fall out of compliance,” he wrote.
Nussle mentioned other issues that have not been addressed.
He wrote that the CDFI Fund’s Target Market Assessment Methodologies require collection of race and ethnicity data using Home Mortgage Disclosure Act procedures for CDFIs with certain target markets. He noted that credit unions have raised questions about the legality of that requirement and have asked the Treasury Department for assistance in explaining why that data is needed.
“Treasury has indicated that it would coordinate with the other financial regulators to provide clarity regarding the legal and compliance risk related to the information collection,” he wrote. “Treasury has also indicated it would consider providing additional support for this data collection.” However, he added, the CDFI Fund finalized the requirements for the data collection without offering any additional support.
Finally, he said, many credit unions are reporting delays of several weeks in receiving responses to questions from fund officials. He added that delays are inevitable when a new certification process is developed. However, he noted that the fund has required that more than 1,400 existing CDFIs apply for recertification between Aug. 1 and Dec. 20.
“Against this backdrop, existing delays of 3-4 weeks for response is a deeply concerning indicator of the Fund’s capacity to manage the coming workload,” Nussle wrote in his letter. He added that the CDFI Fund must be provided the resources needed to meet the needs of certifying and recertifying institutions.
The question of how much the CDFI program will receive this fiscal year remains unresolved, since Congress has not enacted FY24 funding levels.
In his FY24 budget, President Biden requested $341 million for the CDFI program. The Senate version of the bill calls for $334 million.
House appropriators called for $278.6 million in their version of the Financial Services funding measure. When that bill went to the full House floor, a group of House Republicans attempted to eliminate all funding for the CDFI program. That amendment failed, but the bill was pulled from consideration for reasons unrelated to the CDFI program.