WASHINGTON — With one credit union organization essentially saying, ‘Bring it on,” the Consumer Financial Protection Bureau is investigating several community lenders backed by the federal Community Development Financial Institutions Fund, even as the Trump administration seeks to sharply reduce funding for the program and Congress continues to provide bipartisan support for it.
In April, Treasury Secretary Scott Bessent suggested the CDFI Fund had “lost its way.”
The CFPB last month sent “supervisory questionnaires” to at least four loan funds certified as CDFIs, as the CU Daily reported here. The publication, citing documents it obtained and people familiar with the matter, reported the questionnaires were directed by senior political appointees at the bureau and targeted institutions that previously had not been subject to CFPB supervision.
Credit Unions Have ‘Proven Themselves’
At that time, 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.
It remains unclear whether the new CFPB effort is connected to that Treasury Department investigation announced last month by Treasury Secretary Scott Bessent, who said the administration was examining alleged “predatory practices” affecting communities the lenders are intended to serve, as the CU Daily reported here.
That announcement followed 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.
‘Let’s Get the Broom Out’
“Protecting the integrity of CDFI certification and ensuring federal resources are used appropriately is critical,” Stacy Augustine, president of CU Strategic Planning, said in a statement. “So is making sure that the CDFIs committed to serving their communities responsibly have access to Congressionally allocated funds. If the CFPB’s housekeeping will help free up the funds for the good actors, let’s get the broom out and get it taken care of.”
CU Strategic Planning, which has obtained more CDFI funds for credit unions than any other company, added in its statement that Program accountability is important to the long-term strength of the CDFI field.
“CDFI certification is intended to identify institutions that are serving eligible Target markets and meeting program requirements. Institutions engaged in fraudulent, abusive or corrupt lending practices should not be able to obtain or maintain that certification,” the company added.
Ongoing Delays
As the CU Daily has been reporting, the administration has continued to delay approvals needed for hundreds of millions of dollars in CDFI-related funding to move forward, with the Office of Management and Budget not yet having approved notices of funding availability for three programs operated through the CDFI Fund, including a bond guarantee initiative that could provide up to $500 million in support.
As the CU Daily reported, in April Treasury released $289 million in remaining FY 2025 CDFI Fund appropriations after months of advocacy from CDFI industry groups and congressional supporters.
Even with those funds released, final FY 2025 CDFI Program Financial Assistance awards and remaining Technical Assistance awards have not yet been publicly announced, CU Strategic Planning noted.
A partial list of 56 TA award recipients was announced in September 2025. The CDFI Fund’s Small Dollar Loan Program and Bank Enterprise Award Program are even more up in the air, with the most recent NOFAs for both programs occurring in FY 2024.
People familiar with the matter told Bloomberg Law that if the notices are not released soon, more than $500 million approved by Congress for use through September could expire unused.
Efforts to Dismantle the CFPB
As the CU Daily has been reporting, the Trump administration has repeatedly proposed eliminating the CDFI Fund’s core programs. Bloomberg Law said OMB Director Russell Vought, who is also serving as acting CFPB director, has criticized the office for supporting what he described as a “woke” ideology.
Sen. Mark Warner, co-chair of the bipartisan Senate CDFI Caucus, expressed concern over the administration’s actions, according to Bloomberg Law.
A spokesperson for Warner told the publication the senator is “deeply concerned that politically motivated actions could devastate the communities CDFIs were created to serve, including those in need of capital investment, affordable housing, and economic mobility.”
Congress appropriated $324 million annually for the CDFI Fund in fiscal years 2025 and 2026, rejecting White House proposals to dramatically reduce funding. The GOP-led House Appropriations Committee also approved legislation last month that would provide about $277 million for the fund in fiscal 2027.
‘Mounting Pressure’
Jeannine Jacokes, CEO of Partners for the Common Good, told Bloomberg Law that delays in releasing funding notices are creating mounting pressure on the program’s timeline.
“We only have four months left in the federal fiscal year,” Jacokes told the publication.
Bloomberg Law reported Jacokes said even immediate release of the notices would leave “a very, very tight turnaround” to obligate the money before deadlines expire.
Strangle Without Killing
Todd Baker, a senior fellow at the Columbia Business School, told Bloomberg Law many CDFIs lack the resources to withstand federal investigations and suggested some institutions could be forced to close.
“That appears to be the point of the exercise,” Baker told the publication. “Effectively strangle the CDFI Fund without killing it.”
