WASHINGTON — Treasury said it has begun a heightened review of Community Development Financial Institutions (CDFIs) to ensure compliance with applicable laws and the terms tied to federal funding, the latest in a series of moves by the Trump administration around CDFIs and the CDFI fund.
The announcement follows the bankruptcy of a certified CDFI subprime auto lender and used car dealer whose executives were charged with conspiracy, bank fraud, and operating a Continuing Financial Crimes Enterprise.
In response, Scott Simpson, president and CEO of America’s Credit Unions, and Cathie Mahon, president and CEO of Inclusiv, said in a joint statement that credit unions have proven themselves to be “trustworthy” and that the positive effects of CDFIs are “undeniable,” especially on low-income communities. The Defense Credit Union Council said any focus should be on bad actors.
In a statement issued this week, Treasury said it is assessing whether certified CDFIs are complying with legal requirements and the conditions of their assistance agreements under the CDFI Fund.
Part of Broader Effort
The review is part of a broader effort to strengthen oversight of federal grant programs, promote accountability and prevent misuse of taxpayer funds, the department said.
According to Treasury, the examination will focus on identifying potential violations of law and ensuring that institutions receiving federal support are operating within program rules. Where problems are identified, the department said it will take action consistent with applicable laws and program requirements.
Treasury Secretary Scott Bessent said the review is intended to ensure that institutions benefiting from federal programs are adhering to the law and safeguarding taxpayer resources, while also maintaining support for responsible lenders serving disadvantaged communities.
CUs Have ‘Proven Themselves’
“Credit unions have proven themselves to be trustworthy partners for people and communities through the CDFI Fund, and the commitment and impact credit unions have through this program are undeniable,” Simpson and Mahon said in a statement. “CDFI credit unions have deployed hundreds of billions of dollars to support mortgage lending, consumer financing, and small business capital within their local communities, spurring economic growth across the country. We recognize the need for transparency and efficient oversight to protect taxpayers and support responsible lending standards for CDFIs. Indeed, highly regulated, not-for-profit credit unions are leaders in serving low-income people and communities safely and affordably.
“We urge officials to focus on solutions that target unregulated bad actors without compromising trusted stewards,” they added.
DCUC: Review Should Not be Used to ‘Cast Doubt’
“DCUC supports strong oversight of any institution that violates the law or abuses the mission of the CDFI Fund. Taxpayer dollars must be protected, and any genuinely predatory actor should be held accountable. But Treasury’s review should be targeted, transparent, and grounded in clear standards—not used to cast doubt on the many responsible CDFI credit unions serving underserved and military communities with safe, affordable financial products,” the Defense Credit Union Council said in a statement.”
“CDFI-certified credit unions are mission-driven, member-owned institutions that have long participated lawfully in this program, and many already operate under substantial regulatory supervision,” DCUC continued. “Treasury should work directly with CDFI credit unions to ensure any new oversight is practical, consistent, and does not delay approved awards or weaken access to capital in the communities that need it most. Overly broad or unclear review risk slowing the flow of capital to communities that rely on CDFI credit unions every day. The focus should be on addressing bad actors without creating unnecessary barriers for institutions that are already meeting rigorous standards and delivering measurable impact.
“DCUC stands ready to work with Treasury to protect program integrity while preserving mission impact and keeping the CDFI Fund fully executable for servicemembers, veterans, and underserved communities,” the organization concluded.
Nearly 450 CUs are CDFIs
As the CU Daily has reported and as the two CU groups noted, as of Jan. 13, credit unions make up 446 of the 1,383 certified CDFIs nationwide, the largest depository institution type.
“Every CDFI dollar granted to a credit union generates at least $8 in private investment, including new storefronts, renovated homes, and revitalized Main Streets,” America’s Credit Unions and Inclusiv said. “CDFI credit unions have active loans totaling $82 billion in community mortgage lending, $86 billion in local consumer financing, $30 billion in lending to local businesses, and $17 billion in affordable small-dollar loans and alternatives to payday loans.”
As the CU Daily has also been reporting, the Trump administration has sought on multiple occasions to zero out the CDFI Fund or sharply reduce its funding. It has also sought to eliminate Treasury staff responsible for administering the fund. CDFIs continue to wait on CDFI grants awarded in 2025,
