WASHINGTON–In a move for which the CU trade associations had long been advocating, the Treasury’s Community Development Financial Institutions (CDFI) Fund announced it will delay proposed changes to its certification application to carefully review all public comments.
Separately, Treasury announced a second application round of Emergency Capital Investment Program funding closes Jan. 31.
Following the announcement of the CDFI delay, NAFCU noted it has consistently engaged the CDFI Fund throughout this process, calling for more transparency and communication with CDFI credit unions.
Similarly, CUNA also remiinded it has been expressing “serious concerns” that the proposed changes would inappropriately exclude a significant number of mission-focused credit unions.
“We thank the CDFI Fund for hearing our concerns that the proposed changes would significantly undermine efforts of CDFIs to meet the needs of low-income and distressed communities,” said CUNA President/CEO Jim Nussle. “We are pleased they are open to making changes to the application in response to the significant feedback the Fund received. However, such drastic policy changes deserve a transparent and open formal rulemaking process, and we look forward to engaging with the CDFI Fund as this process continues.”
‘Significant Changes’
As CUToday.info reported, the CFDI Fund proposed new guidance in November under the Paperwork Reduction Act, but CUNA responded by calling for the changes to go through the standard notice and comment process, as the changes were significant changes in policy.
CUNA also noted it met with congressional committee staff earlier this month, and detailed the concerns in official comments filed with the CDFI Fund in December.
The CDFI Fund’s scheduled pause on certification applications will remain in effect, and the Fund is expected to release an updated timeline in the near future, CUNA added.
New ECIP Funding Round
Meanwhile, Treasury said second application round of Emergency Capital Investment Program funding closes Jan. 31, 2023. Treasury reported it is anticipating between $160 million and $340 million will be available for investment in qualified institutions in the second round.
NCUA said credit unions participating in the second round of ECIP funding and that meet the eligibility requirements under the agency’s Subordinated Debt rule may also apply for regulatory capital treatment under the pre-approval requirements outlined in the rule.
“As in the ECIP’s first round, Treasury requires approved, qualified financial institutions to select a maturity of either 15 or 30 years during the closing process. Currently, the NCUA’s Subordinated Debt rule limits the maximum maturity of Subordinated Debt Notes to 20 years,” the agency said.
Proposed Rulemaking
As CUToday.info reported, in September 2022 the NCUA board issued a notice of proposed rulemaking to, among other things, provide flexibility on the maximum maturity of Subordinated Debt Notes. The board is currently reviewing comments received on this rulemaking and will consider a final rule in the first half of 2023.
“In the meantime, a credit union applying to the NCUA for regulatory capital treatment should indicate in its application that it would elect either the 15- or 30-year maturity in the event the NCUA board finalizes the September 2022 proposed rule permitting a longer maturity period,” NCUA said. “If the board does not finalize the proposed changes, second-round issuances will be subject to the 20-year maturity limit in the current Subordinated Debt rule.”
The NCUA is encouraging credit unions to submit their Subordinated Debt applications to the appropriate NCUA supervision office by Feb. 28, 2023.
For more info, visit the U.S. Treasury’s website.
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