Proposed changes to the Community Development Financial Institutions Fund’s (CDFI) requirements for new certification as a CDFI institution as well as annual renewal of certification for existing organizations are presenting some significant concerns for credit unions. “Our first concern is the short effective date of implementation—one year after the effective date of the final rule,” said NAFCU Senior Regulatory Affairs Counsel Aminah Moore. Moore explained that this presents a challenge because some of the proposed changes create new data collection and reporting requirements and affect issues such as board member qualifications. Creation of new processes and allocation of staff to handle additional data collection and analysis place an undue burden on credit unions, she said. “Also, credit union board members serve multi-year terms and cannot be switched out easily because they are democratically elected by membership per statute,” she said. “We have recommended a three-year implementation to allow time for compliance.” Another significant change for credit unions with the National Credit Union Administration’s (NCUA) designation as a low-income credit union is the removal of automatic acceptance of the low-income designation (LID) as proof of a primary mission of promoting community development. Currently, institutions that have met NCUA’s rigorous criteria to obtain the LID designation may face decertification if they do not meet the proposed certification standards. “The elimination of the LID designation will be especially burdensome for those credit unions that are already LID CDFIs because they only have one year to come into compliance with this new requirement,” said Moore. “Most credit unions hire a consultant to obtain the expertise needed to produce documentation to meet the CDFI requirement regarding primary mission, but LID credit unions are typically smaller with fewer resources and cannot hire outside assistance.” 13 THE NAFCU JOURNAL May–June 2023 “ A lot of the borrowers who benefit from a CDFI’s help are unable to go anywhere else for loans due to their financial circumstance; they are often the only type of loan the member qualifies for. ” AMINAH MOORE, SENIOR REGULATORY AFFAIRS COUNSEL, NAFCU
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