WASHINGTON—The Defense Credit Union Council has sent a letter to U.S. Treasury Secretary Scott Bessent expressing “deep concern” over President Trump’s recent executive order calling for the elimination of the Community Development Financial Institutions (CDFI) Fund.
DCUC told Bessent the CDFI Fund is a critical resource that helps mission-driven credit unions provide capital and financial services in economically distressed communities.
“Military installations are often located in rural or lower-income regions lacking adequate financial infrastructure, and a large portion of junior enlisted servicemembers meet the CDFI Fund’s ‘Low-Income Targeted Population’ criteria,” wrote DCUC Chief Advocacy Officer Jason Stverak. “The CDFI Fund’s grants and programs have enabled credit unions to offer affordable loans, financial education, and development services tailored to the needs of these populations.”
Eliminating the CDFI Fund, DCUC said, would directly undermine these efforts and harm many of the working families, servicemembers, and veterans who rely on credit unions for their financial well-being.
DCUC noted the executive order signed on March 14, identifies the CDFI Fund as one of several federal entities deemed “unnecessary,” mandating the elimination of its non-statutory functions “to the maximum extent consistent with applicable law.”
“We are alarmed by this directive and its potential impact on community-focused credit unions and other mission-driven lenders,” stated Stverak. “Eliminating the CDFI Fund in its entirety—if carried out—would essentially strip away critical funding streams that credit unions and other community development financial institutions use to serve high-need areas.”
DCUC said the President’s policy shift raises numerous questions and uncertainties for “institutions like ours that have actively partnered with the CDFI Fund to fulfill our mission.”
Questions To Be Answered
DCUC asked Bessent’s office to answer the following questions:
- Is the CDFI Fund being eliminated in its entirety? – We seek confirmation on whether the intent is to completely dismantle the CDFI Fund, or merely to scale back certain activities. Will any statutory core functions or components of the CDFI Fund remain in place, or is the entire Fund slated for closure?
- What specific programs or funding streams are being curtailed or eliminated? – The CDFI Fund administers several important programs, such as Financial Assistance and Technical Assistance grants, the Native American CDFI Initiative, and others. Which of these programs are targeted for cuts under the executive order?
- What are the practical implications for financial institutions currently utilizing CDFI grants? – Many credit unions (and other CDFIs) are currently deploying CDFI grant funds for community development projects and specialized financial services.
- Will previously approved grant disbursements be honored?
- Should institutions prepare for a loss of expected resources?
- Will CDFI-certified credit unions face any changes to their certification status or compliance requirements?
- What happens to current grant recipients and ongoing projects? – Many current grant recipients have made commitments to build facilities, create lending programs, hire staff, and develop financial products based on multi-year CDFI funding.
- Will current awardees be allowed to carry out their projects to completion?
- If not, what provisions will be made to mitigate harm to communities left without promised investments?
The Need for Treasury Oversight And Support
“These questions reflect the serious uncertainty and potential disruption facing community-focused credit unions and the populations we serve. The CDFI Fund was created by Congress in 1994 with a mission to ‘promote economic revitalization and community development’ through investments in local financial institutions. That mission remains as important today as ever,” SCUC said.
DCUC said any move to eliminate or defund the CDFI Fund warrants transparency from the Treasury Department.
“We urge the Treasury to publicly clarify its interpretation of the executive order and the status of CDFI funding,” Stverak said. “If the executive order cannot be reversed outright, then we hope Treasury will work with Congress to preserve the most critical functions of the CDFI Fund and explore alternative funding mechanisms for community development financing that credit unions can access. The men and women of our armed forces—and millions of other Americans in low-income neighborhoods—are counting on the continuity of these resources.
“Given the urgency of this matter, we request a response from the Treasury Department detailing the status of the CDFI Fund and a meeting with you or senior members of your team to discuss the practical implications of this executive order continued Stverak. “We believe that a direct conversation will help clarify these issues and explore potential solutions to ensure that credit unions remain well-equipped to serve military and underserved communities.”
Additional Letters
DCUC on Monday also sent additional letters to the HFSC, the Senate Banking, Housing, and Urban Affairs Committee, and the Senate Community Development Finance Caucus in response to President Trump’s decision to scale back the CDFI program.