The CDFI Fund Transparency Act: What It Means for CDFI Credit Unions
The House Financial Services Committee recently passed H.R. 3161, the CDFI Fund Transparency Act, by a voice vote. Basically, what it does is require the director of the CDFI Fund to testify before the congressional committees of jurisdiction once a year.
On the surface, it sounds like a simple form of accountability to keep the fund on track, but what does it all actually mean for CDFI credit unions and will this have an effect on their certification?
How It All Started
The origins of this legislation can be traced back to when Rep. John Rose paid a visit to Trust Federal Credit Union in Chattanooga, Tenn. Trust’s CEO explained that annual recertification from the CDFI Fund had become an “unnecessarily burdensome process.” In June of 2022, Trust FCU received word from the CDFI Fund that there were issues with its recertification, and that it wouldn’t get their recertification until those issues were fixed. However, Trust FCU didn’t discover what those issues were until August 2022, and even then, the issues were not something the credit union could fix by themselves. Meanwhile, the award the funding it had received through the Emergency Capital Investment Program (ECIP) back in December 2021 was held up for months.
It was upon learning of this story that Rep. Rose decided to help create and sign this bill. During the bill’s markup, he made the importance of this bill clear:
“Currently, there is no requirement for the Director to testify before Congress, which hinders our ability as a Committee to conduct oversight and provide transparency on behalf of our constituents and the American people who utilize the CDFI funds services. The CDFI Fund provides economic opportunity in rural and disadvantaged communities across the country by providing financial assistance and information to their member institutions. That’s exactly why it’s necessary that Congress has oversight over the CDFI Fund.”
What This Means for CDFI Credit Unions
Should this bill pass, it would hopefully lead to fewer headaches for CDFIs. The director of the CDFI Fund will be required to give Congress a status update on the fund’s operations every year, and if a problem should arise, swifter action can be taken to address it. This will mean more communication and less of a gap when it comes to resolving recertification issues. In general, it’s about accountability, and having that accountability in place should make it easier for CDFI credit unions to continue doing what they’re doing.
Even if the bill doesn’t make it all the way through both houses of Congress, it’s important that this conversation is occurring. Increased oversight from Congress can help ensure that CDFI credit unions will have an easier time serving the communities that need the kind of services only they can provide, and for the many CDFI-certified credit unions out there, that’s the whole point of getting the certification in the first place.
Would you like help certifying or recertifying your credit union? Ensuring compliance with CDFI rules? CU Strategic Planning has the most experienced team in the CDFI credit union movement! Learn more or contact us today.