The Community Development Financial Institutions Fund (CDFI Fund) has said that it wants to ensure sufficient time to consider the many comments submitted regarding its proposed update to the CDFI Certification process.
We know that a letter went to Treasury Secretary Janet Yellen from Senators Warner and Crapo – they've taken the lead on the developing Senate caucus on CDFIs. The letter asked Secretary Yellen for more information and to look into the process by which the CDFI Fund was acting on this new CDFI certification. The Administrative Procedures Act hasn't exactly been followed.
The fact that on January 24th the CDFI Fund changed course and has delayed without a date as to when the release will come of the new certification hints at a couple of things. A lot of people are questioning how the CDFI Fund is proceeding on this. This is their second initiative to change the to change the certification process. Their transparency has been called into question. Even the comment period was brief. The Fund seemed to signal they were proceeding, they were taking in comments, but our sense was they were going to do what they were going to do.
Congress has taken note of this. This program is very popular with Congress. And yet the Fund has drawn questions from inquiring minds.
So, what happens next?
1. If you're a credit union looking to certify, it looks like the pause period is going to continue until this change comes out.
2. If you have a certification in and you're waiting, we don't really know. Will they release any of those? Doubtful. I think they're going to wait until after this is done.
3. We’re still waiting on the FA 2022 and ERP Award announcements.
The CDFI Fund has promised to announce a revised timeline in the near future, which it has said will include time for stakeholders to familiarize themselves with the new application prior to the effective date. A grace period will also be implemented for existing CDFIs to achieve compliance with the new guidelines.
The point I want to bring across is this is probably, in the long run, good news – that we should get more information out of the process and hopefully clearer information once the certification is released.
If you’d like further information, please watch our recent webinar, CDFI 2023: What Comes Next for CDFI Credit Unions.