WASHINGTON— The Treasury Department said Monday it has launched a review of certified Community Development Financial Institutions to look for potential violations of law or CDFI program requirements, signaling a new oversight push as the Trump Administration simultaneously seeks to sharply reduce funding for the CDFI Fund.
Treasury said the review will examine whether CDFIs that receive federal assistance are complying with legal requirements and the terms of their CDFI Fund assistance agreements, and said it will take action where appropriate.
Treasury Secretary Scott Bessent said CDFIs remain important to underserved communities, but warned that institutions engaging in “predatory practices” or exploiting the communities they are meant to serve will face scrutiny. The department described the move as part of a broader effort to strengthen oversight of federal grant programs, promote accountability and prevent abuse of taxpayer funds.
The announcement lands just days after Bessent told senators the CDFI Fund had “lost its way” and defended the White House’s FY27 proposal to slash the program by roughly $204.5 million, which would reduce funding from the current $324 million level to about $119.5 million while shifting the remaining dollars more heavily toward rural lending. As CUToday.info reported, the comments drew bipartisan pushback from senators who argued CDFIs remain critical to rural, tribal and underserved communities.
Congress, however, has already shown resistance to the deeper cuts. As CUToday.info reported, the House Appropriations Committee advanced its FY27 Financial Services and General Government bill with $276.6 million for the CDFI Fund—below current funding, but well above the administration’s request—and also included $3.4 million for NCUA’s Community Development Revolving Loan Fund, which supports grants to credit unions serving low-income areas.
The Defense Credit Union Council said it supports strong oversight of any institution that violates the law or abuses the mission of the CDFI Fund.
“Taxpayer dollars must be protected, and any genuinely predatory actor should be held accountable,” stated DCUC Chief Advocacy Officer Jason Stverak. “But Treasury’s review should be targeted, transparent, and grounded in clear standards and not used to cast doubt on the many responsible CDFI credit unions serving underserved and military communities with safe, affordable financial products.
“CDFI-certified credit unions are mission-driven, member-owned institutions that have long participated lawfully in this program, and many already operate under substantial regulatory supervision,” Stverak continued. “Treasury should work directly with CDFI credit unions to ensure any new oversight is practical, consistent, and does not delay approved awards or weaken access to capital in the communities that need it most. DCUC stands ready to work with Treasury to protect program integrity while preserving mission impact and keeping the CDFI Fund fully executable for servicemembers, veterans, and underserved communities.”
ACU/Inclusiv Respond
“Credit unions have proven themselves to be trustworthy partners for people and communities through the CDFI Fund, and the commitment and impact credit unions have through this program are undeniable," said America’s Credit Unions President/CEO Scott Simpson and Inclusiv President/CEO Cathie Mahon in a joint statement. "CDFI credit unions have deployed hundreds of billions of dollars to support mortgage lending, consumer financing, and small business capital within their local communities, spurring economic growth across the country. We recognize the need for transparency and efficient oversight to protect taxpayers and support responsible lending standards for CDFIs. Indeed, highly regulated, not-for-profit credit unions are leaders in serving low-income people and communities safely and affordably. We urge officials to focus on solutions that target unregulated bad actors without compromising trusted stewards.”