WASHINGTON–Both America’s Credit Unions and the Defense CU Council spent the weekend reaching out to Congress and the administration in the wake of an executive order by President Trump that would, among other things, eliminate the Community Development Financial Institutions (CDFI) Fund (see related coverage in The CU Daily).

Approximately 495  credit unions—or more than 10% of all CUs–are certified CDFIs and NCUA has actively encouraged CU leaders in the past to become certified and take advantage of the funding.

“Credit unions exist in the financial services marketplace to provide provident credit to millions of Americans, and they do it in a way that creates financial well-being so people are empowered to stand on their own two feet,” said America’s Credit Unions  CEO Jim Nussle in a statement. “The CDFI Fund has allowed hundreds of credit unions to bolster economic opportunity in their communities and allow their members to achieve the American Dream—further enhancing our nation’s strength. America’s Credit Unions will continue to engage the Trump Administration, Treasury Department, and other stakeholders on programs that support these shared goals.” 

Junior Enlisted Count on Funds

In a letter to Treasury, the Defense CU Council said many junior enlisted servicemembers qualify under the CDFI Fund’s “Low-Income Targeted Population” criteria and rely on CDFI-supported credit unions for accessible loans, financial education, and community development services.”

The letter further said CDFI grants have enabled credit unions to open branches in banking deserts, provide emergency small-dollar loans to military families, and invest in local economic growth. 

“The elimination of the CDFI Fund would directly jeopardize these efforts, harming servicemembers, veterans, and working families who depend on credit unions for financial stability,” DCUC said.

About the Order

Meanwhile, DCUC noted the executive order signed on March 14 categorizes the CDFI Fund as “unnecessary,” mandating its elimination “to the maximum extent consistent with applicable law.”

“This directive introduces significant uncertainty for community-focused credit unions and raises pressing questions about the future of mission-driven financial services,” DCUC said.

Questions Posed

The Defense Council is calling for Treasury to provide “urgent clarification” on a number of issues, including:

• Is the CDFI Fund being eliminated in its entirety?. “We seek confirmation on whether the intent is to completely dismantle the CDFI Fund, or merely to scale back certain activities.” In addition, DCUC is asking whether any statutory core functions or components of the CDFI Fund remain in place, or is the entire Fund slated for closure?
• What specific programs or funding streams are being curtailed or eliminated? “The CDFI Fund administers several important programs, such as Financial Assistance and Technical Assistance grants, the Native American CDFI Initiative, and others. Which of these programs are targeted for cuts under the executive order?”
• What are the practical implications for financial institutions currently utilizing CDFI grants? “Many credit unions (and other CDFIs) are currently deploying CDFI grant funds for community development projects and specialized financial services. Will previously approved grant disbursements be honored? Should institutions prepare for a loss of expected resources? Will CDFI-certified credit unions face any changes to their certification status or compliance requirements?”
• What happens to current grant recipients and ongoing projects? – “Many current grant recipients have made commitments to build facilities, create lending programs, hire staff, and develop financial products based on multi-year CDFI funding. Will current awardees be allowed to carry out their projects to completion? If not, what provisions will be made to mitigate harm to communities left without  promised investments?”

Why Fund Was Created

The DCUC told Treasury the CDFI Fund was established by Congress in 1994 to promote economic revitalization and community development through strategic investments in local financial institutions. 

“In recent years, Congress has repeatedly reaffirmed the Fund’s value, maintaining full funding even amid prior proposals for cuts,” the DCUC sated. “The tangible benefits of the CDFI Fund—such as financing small businesses, developing affordable housing, and providing alternatives to predatory lending—demonstrate its essential role in economic stability.

“Given the gravity of this policy shift, DCUC urges the Treasury Department to publicly clarify its stance on the executive order and the status of CDFI funding,” DCUC continued in its letter to Treasury. “If full reinstatement of the Fund is not possible, we encourage Treasury to collaborate with Congress to preserve its most critical functions and explore alternative funding solutions that will allow credit unions to continue serving high-need areas.”

DCUC further asked for a meeting with Treasury Secretary Scott Bessent or senior officials to discuss the matter.

‘Ready to Collaborate’

“DCUC and its member credit unions remain steadfast in our mission to serve those who serve our country,” DCUC President/CEO Anthony Hernandez said in a statement. “We stand ready to collaborate with Treasury and other policymakers to safeguard financial access for our nation’s military families and low-income communities.”