NAFCU: Treasury Department is Not ‘Forthright’ About CDFI Backlog

The Community Development Financial Institutions program has a serious backlog of applications, and the Treasury Department is failing to be forthright about it with credit unions waiting for their applications to be reviewed, Ann C. Kossachev, vice president of regulatory affairs at the National Association of Federally-Insured Credit Unions charged Wednesday.

“NAFCU and credit union CDFI applicants are cognizant of constraints on the CDFI Fund’s resources; however, the application process as it currently exists is opaque and byzantine,” Kossachev wrote in a letter to Michelle Dickens, program manager in the CDFI Fund’s Office of Certification, Compliance Monitoring and Evaluation.

Democrats on Capitol Hill have been pushing for increased funding for the CDFI program and witnesses recently told a House subcommittee that a funding boost must be accompanied by an increase in appropriations for program administration.

Kossachev wrote that as long as the application backlog remains, Treasury Department officials should openly communicate with applicants about the delays and provide regular updates, particularly as applicants reach the 90-day timeline within which the CDFI normally renders a decision.

“This will ensure that credit unions and other financial institutions that have applied for CDFI certification can properly understand and prepare for delays in the process and keep their boards of directors updated for strategic planning purposes,” she wrote.

She said if the problem persists, fewer credit unions will apply for CDFI certification.

“Credit unions and other applicants should receive realistic and timely information regarding the progress of their application and the timeframe for their expected approval or certification,” she wrote.

Congress has not finished the FY22 appropriations measures, so it is not clear how much the CDFI program will receive during the current fiscal year. The Senate Financial Services appropriations bill includes $360 million for the program. That represents a $90 million increase over FY21. The House appropriations bill and the Biden Administration have called for $330 million for the program. Program advocates recently told a Senate subcommittee that the program should receive $1 billion during the current fiscal year.

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