WASHINGTON—Will the Community Development Financial Institutions (CDFI) Fund be cut? That decision is up in the air, according to one Washington analyst.
“I think whether the fund will be cut still remains to be seen,” Brandy Bruyere, partner at Honigman, LLP, told CUToday.info. “The CDFI Fund is authorized by statute and has appropriations from Congress, and cuts would impact underserved communities.”
As CUToday.info reported, President Trump on Friday signed an executive order that aims to eliminate seven federal agencies—including the CDFI Fund.
Given the statutory nature of the Fund and the authorized appropriations, much like other executive orders, if funds committed by Congress to CDFIs are cut or withheld, Bruyere predicts there will be legal challenges from CDFIs.
“Like other EOs that conflict with statutory language, or interfere with Congress’ constitutional authority to determine how federal funds are spent, much of this will come down to how much discretion is given to the executive branch in the authorizing statutes,” Bruyere said.
Brandy Bruyere
The Riegle Community Development and Regulatory Improvement Act of 1994, which created the Fund, does authorize the executive branch to “determine the character of and necessity for expenditures of the Fund and the manner in which they shall be incurred, allowed, and paid,” Bruyere explained.
“But that does not necessarily mean overriding appropriations from Congress meant for CDFIs,” she said. “Other parts of the Act outline what the Fund ‘may’ do, like offer training programs or capitalization assistance. That some of these activities are not Congressional mandates may leave them more open to executive discretion.”
Bruyere added that credit unions will soon see how responsive the administration is to the industry’s response to the executive order, “and whether members of Congress engage in any pushback as CDFIs have generally been supported on a bipartisan basis.”
Bessent Responds
As CUToday.info , Treasury Secretary Scott Bessent Monday responded to a letter sent to his office over the weekend from the Defense Credit Union Council, stating the department recognizes the important role the Community Development Financial Institutions Fund plays.
"This Administration recognizes the important role that the CDFI Fund and CDFIs play in expanding access to capital and providing technical assistance to communities across the United States,” Bessent stated in his response to DCUC. “CDFIs are a key component of President Trump's commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity. As required by President Trump's March 14, 2025, executive order, the Treasury Department will provide a response to the Director of the OMB on this matter and looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans."
Anthony Hernandez
“We want to thank the Honorable Scott Bessent for his prompt response to our letter and concerns following the recent Executive Order regarding the CDFI Fund,” said Anthony Hernandez, DCUC president/CEO. “DCUC looks forward to collaborating with Treasury and President Trump in supporting the CDFI program while also ensuring financial access for our nation’s military families and low-income communities.”
Citing a response from Bessent published in the Washington Post, which stated Bessent and the Administration “recognizes the important role” of the community lenders and the fund, America’s Credit Unions President and CEO Jim Nussle said, “We thank Secretary Bessent for emphasizing that CDFI Fund programs are statutory programs and stressing the importance of the CDFI Fund to the success of Main Street America. Nearly 500 credit unions are designated as a CDFIs and are critical institutions in boosting local economies and securing the American Dream for their members. America’s Credit Unions has remained committed to educating and providing support to ensure the credit union difference is shared with the Trump Administration, Treasury Department, and other key stakeholders so the millions of Americans served by CDFI credit unions can reach their goals and live their best lives."
As CUToday.info reported, DCUC and ACU each sent letters to Bessent.