Credit Union Groups Push for MDIs to Be Recognized as Minority Lenders

Three industry groups have written to the CDFI Fund asserting that MDI credit unions should be recognized as Minority Lending Institutions. Learn why.

David Baumann


Nov 30



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David Baumann

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David Baumann

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Three industry trade groups write to CDFI Fund regarding designation of Minority Lending Institutions.

The CDFI Fund should consider all MDI credit unions to be Minority Lending Institutions (MLIs), three credit union trade groups told the Treasury Department last week.

“This would spare MDIs additional reporting to maintain their MLI designation and allow them to focus their resources on serving their members and participating in CDFI Fund programming that benefits their members and communities,” Inclusiv, the African-American Credit Union Coalition and the National Association of Latino Credit Unions and Professionals told the agency.

An FY21 appropriations law states that an MLI is a CDFI that directs a majority of its financial products to minority populations or communities, and either is an MDI or demonstrates accountability to minority populations.

The CDFI Fund, operated by the Treasury Department, has been seeking comment on how to designate financial institutions as MLIs.

The credit union groups also contend that MDI credit unions should not be required to report their lending activities to the CDFI Fund in order to maintain their MLI designation.

“Automatically considering MDI credit unions accountable to minority populations is an important acknowledgement of these institutions’ commitment to their members and communities,” they said.

The CDFI Fund’s Position

However, fund officials warn, there is no additional financial benefit for an MLI program.

“Although no federal funding will be associated with an MLI designation at this time, the CDFI Fund seeks to implement the designation for those CDFIs that wish to be recognized for their high levels of service and accountability to Minority populations, as well as to identify barriers such CDFIs experience in providing access to capital,” officials stated, in soliciting comments.

They noted that a list of designated MLIs will be available on the CDFI Fund website.

The Treasury Department also proposed requiring that any financial institution seeking MLI designation be required to demonstrate that it has issued more than half of the number and dollar value of its financial products to minorities or Minority-Majority Census Tracts over the most recently completed 36 months upon initial designation.

The CDFI Fund is further considering whether non-MDI CDFIs seeking minority lending status should be required to demonstrate accountability to minority populations through minority representation on the CDFI’s governing or advisory board.

Criticism from Credit Union Groups

The groups criticized the Treasury Department for failing to attach any material benefits to the MLI designation.

“This omission unfortunately replicates rather than corrects historical inequities as MLIs will be asked to provide data and invest their time in a designation process that will not, at least not yet, increase their access to capital or provide other tangible benefits to them or to the communities they serve,” they wrote.

They urged the CDFI Fund to pair the MLI designation with clear benefits, such as fast-tracking CDFI Certification, or creating specific funding pools for MLIs.

Hope Credit Union Letter

In a separate letter, Kiyadh Burt, vice president of policy and advocacy for Hope Credit Union and its affiliated groups, maintained that to become an MLI, an institution must have demonstrated consistent lending to people and communities of color.

However, he said Hope recommends that in determining eligibility, fund officials allow consideration of financial products that may not be owned by minorities with the condition that at least half of the beneficiaries are members of minority populations.

Burt also wrote that since credit union members elect their boards, they may choose a board that is not more than half minority. In that case, if the credit union meets all other requirements, it should be eligible for MLI designation.


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