CUNA President: CDFI Fund Hampering Credit Union Certification Efforts
A letter from the CUNA president expressed concerns over the CDFI Fund's application and post-certification processes for credit unions. Learn why.
Jim Nussle, president and CEO of CUNA.
Letter from leader of credit union industry group calls into question CDFI application and post-certification processes.
The Community Development Financial Institutions (CDFI) Fund is throwing a series of daunting roadblocks in front of credit unions attempting to obtain CDFI certification, Jim Nussle, president/CEO of the Credit Union National Association (CUNA), said Wednesday.
“We’re troubled by reports that credit unions have received their CDFI designation, only to be informed in a matter of weeks or months that the designation will be revoked if the credit union does not ‘cure’ deficiencies,” Nussle wrote in a letter to Jodie Harris, director of the CDFI Fund at the Treasury Department.
Copies of the letter were sent to leaders of the House Financial Services and Senate Banking committees—the two panels with jurisdiction over the CDFI program.
Many of the concerns that Nussle expressed echo those of officials from the National Association of Federally-Insured Credit Unions (NAFCU) and Inclusiv, a trade group for community development credit unions.
Specific Issues Raised in the Letter
In his letter, Nussle wrote that in many cases, the deficiencies cited by CDFI Fund officials have existed throughout the application process and could have been discussed earlier. He added that instructions on how to correct those shortcomings are left vague.
Nussle alleged that credit unions have also received letters that are directly contradicted in conversations with CDFI Fund staff, resulting in confusion and uncertainty.
“The described cure periods are also reportedly insufficient to allow for the curing of the deficiencies,” he stated, “forcing credit unions to make additional filings to request reasonable extensions based on statutory and regulatory requirements applicable to all credit unions.”
He added that several credit unions reported their certification could be revoked due to the demographics of their board, which was elected by credit union members.
To compound the problem, Nussle said, the credit unions have not received guidance on how to solve that issue. At least one credit union was given 30 days to come up with a resolution—an impossible timeframe considering the credit union would have to go through the election process to find new board members.
Concerns Over the Application Process
Echoing other trade groups, Nussle noted there is a significant backlog of credit unions whose applications had not been processed, citing one specific case in which a credit union had its application pending for 11 months.
“Despite this significant backlog and an unprecedented level of interest and funding available to CDFI-designated financial institutions, the CDFI Fund has announced an intention to strengthen the application process,” Nussle wrote.
The CDFI Fund review of the application process, he said, caused the National Credit Union Administration (NCUA) to eliminate a program in which agency officials helped low-income credit unions prepare their CDFI applications.
“The receipt of a designation must be sufficiently definitive to empower a CDFI-designated credit union to confidently undertake business planning and launch related initiatives without concern that the CDFI designation will be revoked unexpectedly,” the letter states.
In May, officials from NAFCU and Inclusiv asked NCUA Chairman Todd Harper to help convince Treasury Department officials to speed up the application review process.
And in January, NAFCU officials asked the Treasury Department to add staff to help address the backlog problem. In response, CDFI Fund officials said they were increasing staff, but that training those new employees takes time. They added that they no longer could provide a definitive timeline for certification decisions, despite in the past having set a goal of issuing their responses within 90 days after an application was submitted.