Debt Limit Bill Rescinds ECIP Money, but Impact Is Unclear

Credit union group seeking clarification from Treasury Dept.

A little-noticed provision of the debt limit deal reached over the weekend would rescind any “unobligated” funds from the CDFI Fund’s Emergency Capital Investment Program (ECIP).

However, it was not clear Tuesday exactly how much of the $9 billion Congress provided for the pandemic-era remains unobligated.

H.R. 3746, the bill that would raise the debt ceiling, would keep $284.5 million in the ECIP program for “necessary expenses associated with the making of awards announced prior to the enactment of this Act.”

Officials from the Treasury Department, which administers the CDFI Fund, did not respond to a request for details about how much in the program has not been awarded.

Context

House Speaker Kevin McCarthy, R-Calif., and President Biden reached the deal in an effort to avoid a U.S. default on its debt. Congress is expected to consider the bill this week, although it remains to be seen if supporters have enough votes to pass it.

The bill includes several provisions to control federal spending, including proposals to rescind unspent pandemic-related programs.

Response From Credit Union Group

Jason Stverak, CUNA’s deputy chief advocacy officer, said Tuesday the trade group was concerned about how much would be rescinded from the ECIP program and had told lawmakers they were worried about the impact the rescission could have.

“We are feeling optimistic with where things stand for credit unions and ECIP funds based on what we have discovered thus far,” he said Tuesday afternoon. “However, we remain concerned with how Treasury will interpret this verbiage on the exemption of ECIP from rescissions. Specifically, there is a gap between the statute’s ‘commitment’ language with ECIP funds and the use of the term ‘announcement’ in the bill. We are working very closely with Treasury and our team has been in contact with Capitol Hill offices all weekend on clarification.”

Backstory and NCUA Guidance

The ECIP was created by Congress in the FY21 omnibus appropriations bill; it provided $9 billion, with the program expiring after that money is spent. Under the program, the Treasury Department was authorized to make investments in CDFIs.

The NCUA board took several steps to ease the way for credit unions to receive ECIP funds. For instance, the board clarified that ECIP-participating credit unions may count ECIP funding as regulatory capital for the entire time it is held.

NCUA Board Chairman Todd Harper said in March that 83 credit unions had received about $2.3 billion in capital investments from the program.

And Harper may have been prescient when, in February 2021, he urged credit unions to act quickly to apply for ECIP funds.

“One important aspect of the program that I would like to highlight is that the total investments from ECIP cannot exceed $9 billion,” he said at the time. “In other words, if an eligible credit union wants to apply for ECIP funding, time is of the essence. Once Treasury invests the appropriated $9 billion, there will be no further funding under ECIP. That is why eligible credit unions need to quickly capitalize on this opportunity.”