WASHINGTON—Concerns over reports some credit unions are being awarded community development financial institution (CDFI) designations only to have them revoked until they cure “perceived deficiencies” have been raised in a letter from CUNA to CDFI Fund Director Jodie Harris.
“Multiple credit unions have indicated they have been told their CDFI designation may be revoked due to the demographics of their democratically elected board,” the letter states.” Credit unions report an absence of meaningful guidance from the CDFI Fund about the specifics of how the demographics of their particular board is insufficient and how they might be able to cure the deficiencies, leaving them unable to determine whether the actions available to them under the credit union’s bylaws and chartering laws would even permit them to take action to cure the issues within the limited cure periods permitted by the CDFI Fund.”
CUNA additionally related in the letter that credit unions are reporting that the facts or circumstances deemed deficiencies are often present throughout the application process, cannot be changed retroactively, and the CDFI Fund offers little or no guidance on how they can be cured within very limited time frames permitted by the Fund.
Additional Issues
Credit unions further report, CUNA added, a significant backlog in processing applications, with multiple credit unions having to wait a year for a determination of their application, delaying their opportunity to apply for grants or to issue secondary capital.
Credit unions account for 25.4% of CDFIs and 56.8% of the total amount of issued financial products to CDFI target markets. Credit unions are critical participants in the program, providing financial services to low-income and targeted markets in support of the program’s mission, CUNA noted.
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