WASHINGTON, DC (March 17, 2025) |
This morning, the Defense Credit Union Council (DCUC) 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.
Representing defense-focused credit unions that serve over 40 million members—including servicemembers, veterans, and their families—DCUC is alarmed by the potential impact this decision could have on financial access for military and underserved communities.
The CDFI Fund is a crucial resource that empowers mission-driven credit unions to provide affordable financial services in economically distressed communities. As of January 2025, 495 certified CDFI credit unions across the nation serve millions of residents in low-income areas, including those surrounding military bases. Many junior enlisted servicemembers qualify under the CDFI Fund’s “Low-Income Targeted Population” criteria, relying on CDFI-supported credit unions for accessible loans, financial education, and community development services.
For decades, CDFI grants have enabled credit unions to open branches in banking deserts, provide emergency small-dollar loans to military families, and invest in local economic growth. The elimination of the CDFI Fund would directly jeopardize these efforts, harming servicemembers, veterans, and working families who depend on credit unions for financial stability.
Concerns Over the Executive Order’s Impact
The executive order, signed on March 14, 2025, categorizes the CDFI Fund as “unnecessary,” mandating its elimination “to the maximum extent consistent with applicable law.” This directive introduces significant uncertainty for community-focused credit unions and raises pressing questions about the future of mission-driven financial services.
DCUC respectfully seeks urgent clarification from the Treasury Department on the following critical issues:
- 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 CDFI Fund was established by Congress in 1994 to promote economic revitalization and community development through strategic investments in local financial institutions. In recent years, Congress has repeatedly reaffirmed the Fund’s value, maintaining full funding even amid prior proposals for cuts. The tangible benefits of the CDFI Fund—such as financing small businesses, developing affordable housing, and providing alternatives to predatory lending—demonstrate its essential role in economic stability.
Given the gravity of this policy shift, DCUC urges the Treasury Department to publicly clarify its stance on the executive order and the status of CDFI funding. If full reinstatement of the Fund is not possible, we encourage Treasury to collaborate with Congress to preserve its most critical functions and explore alternative funding solutions that will allow credit unions to continue serving high-need areas.
With the financial security of millions of servicemembers, veterans, and underserved Americans at stake, DCUC requests a response from the Treasury Department, as well as a meeting with Secretary Bessent or senior officials to discuss the practical implications of this executive order. A direct conversation will be invaluable in identifying solutions that ensure continued access to financial services for military and underserved communities.
“DCUC and its member credit unions remain steadfast in our mission to serve those who serve our country,” says Anthony Hernandez, DCUC President/CEO. “We stand ready to collaborate with Treasury and other policymakers to safeguard financial access for our nation’s military families and low-income communities.”
For more information, please contact Jason Stverak at jstverak@dcuc.org and visit dcuc.org/advocacy.