Funding Deal: $295 Million for CDFI; Easier Ouster of CU Members

(From Washington Credit Union Daily) – House and Senate appropriators have reached agreement on an FY22 government funding package that would provide a $25 million boost for the Community Development Financial Institution program and make it easier for credit unions to expel members.

In addition, it would extend the National Flood Insurance Program through the end of the fiscal year without making changes to the program.

The bill includes extraneous legislation that Congress decided was a high priority. That is why it includes language from the “Credit Union Governance Modernization Act.” That measure would allow federal credit unions to expel a member for cause by a majority vote of a quorum of the credit union. The credit union would be required to inform its membership about the expulsion. Under current law, a credit union must hold a membership meeting to expel a member.

The 2,741-page legislation, released on March 8, also would provide $1.545 million for the National Credit Union Administration’s Community Development Revolving Loan Fund program. That program received $1.5 million in FY 21. The proposed funding is less than the House included in its Financial Services appropriations bill. The House bill called for $4 million for the program.

The bill includes funding for much of the federal government. It does not include money for National Credit Union Administration management; credit unions pay for that. It also does not include funding for the Consumer Financial Protection Bureau; that agency is funded through the Federal Reserve.

The bill would provide $295 million for the CDFI program, less than the Biden Administration or either house included in their funding measures, The administration and the House called for $330 million, while the Senate version of the funding measure called for $360 million. Program advocates had called for as much as $1 billion for the program

The bill also calls for the Treasury Department to conduct a study on the impact of the CDFI program, the overall risks the fund’s portfolio is exposed to and awardees that are at risk of noncompliance. It also would require the Treasury Department to brief congressional committees on the fund’s support for Minority Depository Institutions.

The bill also includes a statement that the Treasury Department and financial regulators should work with credit unions and banks to reduce the number of unbanked or underbanked people. In addition, it calls for the Financial Crimes Enforcement Network to establish a beneficial ownership database to help implement new Bank Secrecy Act and Anti-Money Laundering rules.