WASHINGTON–JetStream FCU CEO Jeanne Kucey told a Senate Banking Committee hearing credit unions that are CDFIs and MDIs play strong roles in their communities and could accomplish even more if Congress would provide expanded powers.
Kucey, whose comments came during a hearing titled, “The Role that Community Development Financial Institutions and Minority Depository Institutions Serve in Supporting Communities, leads a Miami Lakes, Fla.-based credit union that is a CDFI and a MDI.
Kucey testified on behalf of NAFCU. JetStream FCU has more than $240 million in assets and more than 18,000 members.
Kucey told the committee credit unions outpace banks when it comes to MDIs and in having female CEOs, and that there are 416 CDFI-designated credit unions as of Dec. 28, 2021, up from 285 in November of 2018, serving nearly 17 million predominantly low-income consumers and communities of color.
“As the country continues its pandemic recovery, NAFCU urges Congress to consider increased funding levels for CDFI programs in any future fiscal year appropriations bills,” Kucey stated. “It is this program that gives credit unions like JetStream an important resource to help create programs to serve their communities. Furthermore, while Congress is considering support for the CDFI funds, we urge you to ensure that the Treasury Department is given the necessary resources to clear out 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. NAFCU also supports legislative measures to streamline and modernize the requirements and application process to make it easier for institutions to be approved as a CDFI.”
Helping Those Living on ‘Heat Island’
After sharing examples of how JetStream has helped residents in Miami-Dade County in Florida, as well as Puerto Rico, especially after hurricanes, Kucey said that since 2014 the credit union has ensured everyone employed at JetStream, including interns, receive certification in Community Development Certified Financial Counseling from the National Cooperative Business Association.
“Our low-income members are more likely to live in urban heat islands with fewer trees and more pavement, as well as reside in housing with older building materials and appliances,” said Kucey. “In Miami, 65% of the housing stock is over 50 years old. As a result, there is a huge need for major repairs and retrofitting such as new roofs, installing impact windows, performing mold remediation, replacement of air conditioning units, and making energy-efficient upgrades. While our current Home Equity Credit Line product enables many of our members to finance these repairs, we have identified a segment of our membership that does not qualify for this type of loan due to a lack of equity, poor credit history, or high debt ratios. They are trapped in older, energy inefficient homes that are often in dire need of substantial repairs.”
Kucey said the credit union’s response has been the creation of an “Increasing Climate Resiliency and Health Equity through Energy Efficiency (ICRHEEE)” strategy.
“This strategy includes loan options that do not require equity and are lenient with respect to debt ratios and poor credit,” she testified. “The strategy also includes financial counseling, coaching, and community outreach. We are looking forward to unveiling these new products and services to our members in 2022 in an effort to meet more of the needs of our membership and the local community.”
Other Recommendations
On behalf of credit unions and NAFCU, Kucey recommended:
- “As the Subcommittee examines approaches to aid CDFIs and MDIs, we believe it is important to properly fund federal support for CDFIs and MDIs. This includes increased funding through the annual appropriations process for both the CDFI Fund and the NCUA’s Community Development Revolving Loan Fund (CDRLF). The CDRLF is an important tool for credit unions to serve low- income areas by providing grants to low-income credit unions to meet needs in those areas, often to provide technology resources to help members.”
- Support for the creation of a CDFI Crisis Fund that would automatically make additional capital available to CDFIs to address natural disasters and economic crises when they occur in their community as proposed by Sen. Brian Schatz (D-HI).
- That more funds be provided to Treasury so the CDFI Fund has the resources to handle the volume of applications in a more timely manner
- That technical issues or overburdensome requirements do not hamper efforts by credit unions to serve those who want to help members in need.
- That the process for certifying, and maintaining certification, for a credit union, as an insured depository institution (IDI), should CUs’ unique nature.
- In addition, that the “primary mission test” is not a hurdle for credit unions as not-for-profit member-owned cooperatives.
- That the “target market test” for certification should focus on those to whom the credit union provides a wider range of financial services, and not just to whom it has already made loans, to meet thresholds
- That there be a longer “cure period” to maintain certification that ensures credit unions can keep existing CDFI-backed programs in place.
Power to Expand FOMs
Finally, Kucey urged Congress to amend the Federal Credit Union Act so that FCUs serving a distinct field of membership can add underserved areas to their fields of membership and that the general statutory limit on federal credit union loans of 15 years, with a limited number of exceptions, such as mortgage loans for a primary residence, be lifted.
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