WASHINGTON–Treasury Secretary Scott Bessent has responded to credit unions that have contacted him regarding the fate of the Community Development Financial Institutions (CDFI) Fund, but the response will not satisfy anyone hoping for a clearer sense of direction.
Treasury was given until this Friday, March 21, to respond to a White House executive order that requests a proposal for eliminating the CDFI Fund “to the maximum extent consistent with applicable law.”
On Sunday, Defense Credit Union Council CEO Tony Hernandez sent a letter to Bessent and the Treasury Department the order that alerted Treasury to the concerns of DCUC and credit unions.
In the letter, Hernandez expressed “deep concern” over what elimination of the program could mean for defense-focused credit unions, noting many serve military installations in and around underserved areas.
Hernandez further noted that many junior enlisted servicemembers meet the CDFI Fund’s criteria for a “low-income targeted population.”
Hernandez said DCUC was “alarmed” by a statement in the executive order describing the CDFI Fund as “unnecessary,” citing its “potential impact on community-focused credit unions and other mission-driven lenders. Eliminating the CDFI Fund in its entirety—if carried out—would essentially strip away critical funding streams that credit unions and other (CDFIs) use to serve high-need areas.”
Questions Posed
The DCUC letter also asks for questions:
- Is the CDFI Fund being eliminated in its entirety?
- What specific programs of funding streams are being curtailed or eliminated?
- What are the practical implications for financial institutions currently utilizing CDFI grants?
- What happens to current grant recipients and ongoing projects?
Muddying the waters even more is that the budget agreement recently signed by President Trump includes $324 million in appropriations for the CDFI Fund and $500 million in CDFI Bond Guaranty Authority.
Treasury Responds
In his response to DCUC, Secretary Bessent wrote, “This Administration recognizes the important role that the CDFI Fund and CDFIs play in expanding access to capital and providing technical assistance to communities across the United States. CDFIs are a key component of President Trump’s commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity.
“As required by President Trump’s March 14, 2025, Executive Order, the Treasury Department will provide a response to the Director of the OMB on this matter and looks forward to future engagement with CDFIs and other stakeholders to strengthen the impact of these statutory programs and incentivize economic opportunities for all Americans.”
Looking to Collaborate
Following Bessent’s response, Hernandez issued a statement saying, “We want to thank the Honorable Scott Bessent for his prompt response to our letter and concerns following the recent Executive Order regarding the CDFI Fund. DCUC looks forward to collaborating with Treasury and President Trump in supporting the CDFI program while also ensuring financial access for our nation’s military families and low-income communities.”
ACU Responds
In a statement in response to Bissent’s response, America’s Credit Unions CEO Jim Nussle said, “We thank Secretary Bessent for emphasizing that CDFI Fund programs are statutory programs and stressing the importance of the CDFI Fund to the success of Main Street America. Nearly 500 credit unions are designated as a CDFIs and are critical institutions in boosting local economies and securing the American Dream for their members. America’s Credit Unions has remained committed to educating and providing support to ensure the credit union difference is shared with the Trump Administration, Treasury Department, and other key stakeholders so the millions of Americans served by CDFI credit unions can reach their goals and live their best lives.”