Hopeful the Fund implements during certification update process
CDFIs have been waiting, not-so-patiently, to learn the fate of the certification process from the Community Development Financial Institution Fund. We moved one step closer earlier this month with the advisory board’s recommendations to the Fund – and its seemingly positive news!
You’ll recall, the advisory board was slated to meet and then abruptly canceled after the CDFI Fund’s report, FY 2021 activities of the CDFI Program and NACA program Financial Assistance Award Recipients, came out illustrating all the amazing work CDFI credit unions were doing in their communities in 2021. If you’d like to review all the key credit union data from the report, we summarized it here in our previous post, CDFI Fund Data Could Force Changes to Controversial Application Recommendations.
When the advisory board met and shared its recommendations to the CDFI Fund, we saw several improvements moving the updated certification process in the right direction.
Among the issues highlighted that affect credit unions:
Ability to repay rules may impair CDFI flexibilities – allow for narrative explanations.
The narrowed definition of development services excludes critical and cost-effective activities – should be expanded.
Reconsider the financial conflict of interest policy which prohibits credit union board members from being considered as accountable to the Target Market if they get a loan from their own credit union.
Certification requirements should not conflict with the Equal Credit Opportunity Act nor prudential regulators rules.
Unintended consequences should be further examined.
After the recommendations were released, CU Strategic Planning CEO Stacy Augustine said she was “encouraged” by the proposed changes to the certification updates. “I think our only disappointment is that there were only eight of recommendations in total, whereas there were dozens of comment letters submitted from our industry and others highlighting concerns with the proposal,” she said.
Many credit unions could have been swept from CDFI certification if the previous proposal stands. After seeing in the CDFI’s own data that credit unions provided 92% of all reported loan dollars to low-income consumers, we simply cannot see how the previous proposal would stand.
“However,” Augustine added, “the question is, what happens next? No timelines were given. If I got my crystal ball out, I would guess they might not want to implement these things until they have a new director.
CU Strategic Planning Chief Experience Officer Mike Beall agreed, “There’s a whole lot of wait and see until we see what’s accepted and how those eight recommendations make their way – or not – into the final certification rule.”
He added that whispers are swirling around Washington that the updated could be finalized toward the very end of the year, rather than the October-November timeframe we’d heard before. Regardless, our team will be by your side to ensure our clients are in compliance. Stay tuned!