WASHINGTON–Credit unions, their trade groups and other organizations spent the weekend seeking to find a way forward following Friday’s announcement that the Trump administration and Treasury, as part of the permanent reduction-in-force (RIF) plans it is initiating as the federal government shutdown is continuing, plans to eliminate all staff of the Community Development Financial Institutions (CDFI) Fund.
The announcement came on the same day the Senate passed the National Defense Authorization Act (NDAA) with an amendment that would guarantee the future of the fund.
Approximately 500 credit unions are CDFIs.
One Hill source said Treasury is expected to issue between 1,400 and 1,500 RIF notices agency-wide; CDFI staff numbered around 100 at the end of 2024. The terminations are to take effect Dec. 13.
Some Washington analysts have suggested the proposed workforce reductions are meant to pressure Democrats to approve a government funding bill and that the jobs could be spared.
Waters Blasts Move
Rep. Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, blasted the staff eliminations, saying in a statement, “Donald Trump and his Budget Director Russell Vought are using the government shutdown, caused by Trump’s refusal to talk to Democrats, as a cover to advance the radical Project 2025 agenda and undermine hard-working American families and the programs they rely on. Their unprecedented and unconstitutional attempt to fire all the CDFI Fund staff at the Treasury Department will effectively shutter the program by leaving no one to carry out its statutory mission and deploy previously appropriated funds.
“The CDFI Fund is a Congressionally mandated program that the President has no power to eliminate. Additionally, Congress has already provided hundreds of millions of dollars for the Fund to deliver through credit unions, community banks, and loan funds to underserved communities across the country,” Waters added.
Time to ‘Reverse Course’
“The termination date gives the administration time to reverse course—but right now, there’s no clarity on what staff, if any, will return, or when,” said CU Strategic Planning President Stacy Augustine.
In its statement, CU Strategic Planning, which has obtained more than $1 billion in CDFI funds for credit unions in total added, “The message being sent is political, but the consequences for community development are real.”
The company noted CDFIs across the country rely on the Fund for capital, but it’s Congress that relies on the Fund for oversight—ensuring that federally appropriated dollars are appropriately spent.
“In addition to the fact that Treasury Secretary Bessent has asserted all CDFI Fund programs are statutorily authorized, there remain hundreds of millions of dollars in awarded funds that are currently being overseen by Fund employees,” CU Strategic Planning said. “Staff are required in order to meet federal reporting obligations.”
“Friday’s RIFs, even if partially or fully reversed in the future, are adding to the existing bottlenecks in certification, award administration, and compliance that ripple through thousands of loans on Main Streets across the country,” said Augustine. “The RIF notices say the Department of Treasury views the CDFI Fund as not aligned with the president’s priorities. Treasury’s public statements say the opposite: the programs are statutory and operating. That contradiction is another sign that these layoffs are political gamesmanship.”
Native Americans Affected
Credit unions aren’t the only ones expressing concerns over the CDFI Fund staff reduction. Tribal Business News noted the employed 102 full-time staff and that the elimination threatens to cut off the only federal program designed specifically to support Native financial institutions operating in areas where traditional banks are scarce.
The organization noted one survey found 46% of Indian Country is considered a banking desert — 12 times the national rate.
The Native American CDFI Assistance program — often called the NACA program — has provided more than $221 million in support since 2001, generating over $1.6 billion in loans and investments across Native communities through 2021, according to Treasury data.
