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NAFCU pushes back against proposed CDFI application changes, offers recommendations
In a letter sent to the Community Development Financial Institutions (CDFI) Fund Monday, NAFCU Senior Regulatory Affairs Counsel Aminah Moore explained why the association does not support proposed changes to the CDFI certification standards and instead recommends increased transparency and minimal discretion from the fund regarding all certification requirements so that new applicants and already established CDFIs can comply with a predictable process without excessive regulatory burden.
Of note, the CDFI Fund’s proposed changes would implement a one-year effective date, which NAFCU believes would not be long enough for CDFIs to come into compliance with the new standards. Moore recommended a three-year effective date or a mandatory three-year cure period for CDFIs to comply with the proposed certification standards.
Moore urged the CDFI to:
- defer to an applicant’s functional regulator regarding what products should and should not be offered to consumers; and
- provide all credit unions parity with banks and exempt them from completing the financing entity section of the new application, as well as exempting affiliates from demonstrating primary mission requirements.
The CDFI Fund is currently in a six-month blackout period, which began Oct. 1, during which it is not accepting new applications in an attempt to update its application process.
The fund in early October released a first look at the revised application and Annual Certification Data Collection Report (ACR), as well as revisions on its data collection mechanisms.
The agency in September also issued supplemental guidance on CDFI certification and published a CDFI Certification Cure Period FAQ guide to inform CDFIs how to resolve certification-related deficiencies during a cure period.
In addition, the CDFI Fund issued a request for public comment on pre-approved Target Market assessment methodologies related to the CDFI certification process as part of its ongoing efforts to revise the process. Comments are due to the CDFI Fund by Dec. 19.
NAFCU has published several issue briefs, including one on CDFIs, to help credit unions stay informed on this topic. Stay tuned to NAFCU Today for the latest on this topic.