WASHINGTON–An amendment to the National Defense Authorization Act (NDAA) has been introduced in the Senate that seeks to expand and strengthen the Community Development Financial Institutions (CDFI) Fund.
The amendment, which has the support of credit unions, was introduced by Sens. Mark Warner (D-VA), Steve Daines (R-MT), Mike Rounds (R-SD), and Tina Smith (D-MN), would extend the CDFI Bond Guarantee Program for four years, lower the bond threshold to $25 million from $100 million to expand access, and permanently authorize the Native CDFI lending program.
It would also require the Treasury Secretary to testify annually on CDFI Fund operations, ensuring accountability and transparency.
As the CU Daily has been reporting, the Trump administration has sought to essentially defund the CDFI program, a move credit unions have strongly opposed.
‘Only Financial Lifeline’
“DCUC strongly supports this bipartisan effort to reinforce the CDFI Fund,” Anthony Hernandez, president and CEO of the Defense CU Council (DCUC), said in a statement. “Credit unions are often the only financial lifeline in underserved communities, including military bases, rural towns, and inner-city neighborhoods. Strengthening the CDFI Fund ensures that these institutions can continue to serve families, small businesses, and servicemembers who are too often overlooked by larger banks.”
More than 2,500 credit unions, which is more than half of all CUs, have the low-income designation. More than 500 CUs are certified CDFIs.
‘Severe Consequences’
Responding to a recent op-ed attacking the credit union tax status (see story here) and efforts to cut off CDFI support, would have “severe” consequences, according to DCUC.
Those consequences, according to DCUC, would include:
- Consumers would lose over $10 billion annually in direct financial benefits from better pricing on financial products.
- Many smaller credit unions, particularly those in rural areas or on military bases, would be forced to merge or close—creating “financial deserts” where communities currently rely on them.
- Programs such as free financial counseling, first-time homebuyer workshops, and small-dollar emergency loans would be scaled back or eliminated.
- Big banks would face less pressure to keep rates low and fees fair, raising costs for all consumers.
- New tax burdens could force layoffs or branch closures, costing the U.S. economy an estimated 822,000 jobs and reducing GDP by $266 billion over the next decade.
‘Should Not be Swayed’
“Congress should not be swayed by false narratives,” said DCUC’s chief advocacy officer, Jason Stverak, in a statement. “The truth is clear: credit unions deliver enormous value to their members and communities, and bipartisan support for the CDFI Fund proves just how vital they are to the nation’s financial health and security.”
