Bessent said CDFI Fund “Lost Its Way”
Sarah Snell Cooke, founder/CEO, The Credit Union Connection
One bankrupt subprime auto lender, and suddenly, the entire CDFI Fund is under scrutiny.
Treasury Secretary Scott Bessent faced pointed questions from senators last week about the Office of Management and Budget’s proposed $204.5 million cut to the CDFI Fund—a reduction of more than 60% that would slash the program from $324 million to roughly $134 million.
The exchange revealed a sharp divide between lawmakers who see CDFIs as essential infrastructure for underserved communities and an administration that believes the program has become politicized.
The hearing came just days after the Treasury announced it had initiated a review of certified Community Development Financial Institutions to identify potential violations of applicable law or CDFI requirements. Translation: The administration is looking for problems.
The Budget Hearing Exchange That Tells You Everything
Senator Christopher Coons (D-Del.) noted he was “encouraged” by Bessent’s previous remarks supporting the CDFI Fund, and then went straight for the jugular regarding the budgetary contradiction.
“Could you tell me briefly why?” Coons asked.
Bessent responded, “I can tell you that part of the CDFI program had lost its way in terms of a partisan agenda, and we can see, for instance…”
Coons cut him off. “I don’t think funding affordable housing is a partisan agenda.”
In another segment of the hearing, Senator Deb Fischer (R-Neb.) made that case clearly, highlighting the work of the 11 CDFIs in Nebraska. “They’re sustaining daycares in small communities of just over 300 people. They’re keeping retail stores in rural downtowns, initiating new businesses on the Winnebago and the Omaha reservations in northeast Nebraska, and they’re supporting efforts to increase rural housing developments, which is so needed.”
That’s bipartisan recognition that the CDFI model works.
The Credit Union CDFI Reality
As of January 2026, credit unions make up 446 of the 1,383 certified CDFIs nationwide. Credit unions are regulated, member-owned cooperatives serving communities no one else will.
Stacy Augustine, president of CU Strategic Planning, a Callahan company, stated, “The CDFI credit unions we work with are committed to furthering opportunity in the communities they serve and take the designation of Community Development Financial Institution very seriously. The recent administrative changes to CDFI certification provide a good opportunity to look at what works well and what can be improved at the agency. CU Strategic Planning would welcome any ability to work cooperatively with Treasury on improvements that help ensure that CDFIs do their best work in American communities.”
The Defense Credit Union Council’s statement was more pointed: “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.”
And America’s Credit Unions issued a joint statement with President/CEO Scott Simpson and Inclusiv President/CEO Cathie Mahon. “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.”
The statement continued, citing that CDFI credit unions deployed hundreds of billions of dollars to support mortgages, consumer loans and capital to small businesses.
“We recognize the need for transparency and efficient oversight to protect taxpayers and support responsible lending standards for CDFIs … We urge officials to focus on solutions that target unregulated bad actors without compromising trusted stewards.”
What This Means for CDFI Credit Unions
Treasury’s review means CDFI credit unions should expect increased scrutiny of compliance, reporting and program outcomes. So ensure your documentation is up to date and your impact metrics are clear.
The Bessent exchange with Senators makes clear the administration sees CDFI funding through a political lens, not just an economic development lens. That means credit unions need to keep making the economic case, like jobs created, capital deployed, communities served. The mission does not speak for itself.
Bipartisan support remains, which credit unions are leveraging in their advocacy efforts.
The CDFI model works. CDFI-certified credit unions have proven that.
If you’re interested: What triggered the review
Treasury’s announcement framed the CDFI review as part of broader efforts to “strengthen oversight of federal grant programs, promote accountability, and prevent abuse.”
The timing isn’t coincidental. The review 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. That’s the kind of headline that gets congressional attention and gives administrations cover to crack down on entire programs.
“CDFIs play a critical role in expanding access to capital in underserved communities,” Bessent said in Treasury’s announcement. “CDFIs that engage in predatory practices and take advantage of the very communities they are intended to serve will be reviewed and, where appropriate, held accountable. We remain committed to enforcing the law and protecting taxpayer resources while supporting the mission of responsible CDFIs.”
Bad actors should be held accountable. But is the Treasury’s response proportional to the problem? Millions of people’s lives and financial security are at stake.