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CDFI Ignored in Stimulus

There’s a federal program that’s geared toward leveraging private capital to invest in economically disadvantaged areas of the United States.

With the global COVID-19 pandemic spurring cyber criminals to ramp up their attacks, the need for CUs to prioritize cybersecurity has intensified. Discover the latest best practices for keeping members’ data safe straight from the experts in this Focus Report. Y6

FOCUSREPORT: CYBERSECURITY

CUs Give
Small Biz
Owners
Relief
EMERGENCY LENDING

The program sounds like a natural part of the effort to pump money into the economy to help offset the impact of the coronavirus crisis.

JIM DUPLESSIS

jduplessis@cutimes.com

Yet so far, the Community Development Financial Institutions program has received none of the stimulus money Congress has set aside to battle the economic impact of the crisis.

redit unions are gearing up to help business members survive the coronavirus pandemic, reducing the economic damage to their workers and ultimately to the lenders.

That may be because of one political reality: The Trump Administration does not like the program. Since taking office, Trump Administration budgets each year have called for the program to be eliminated. One year, the administration tried to rescind money that already had been appropriated for the CDFI program.

Loan modifications are the first and most common step for most credit unions, most typically involving three months of deferred payments, followed by three months of interest-only payments, according to experts participating in a recent webinar sponsored by CU Business Group, a CUSO based in Portland, Ore.

NEW CREDIT UNIONS

But there’s another political reality: Congress likes the program.

Charter in Reach for Student-Run CU

They also advised eliminating fees for modifications.

The CDFI program received a $12 million boost this year, which totaled $262 million.

PETER STROZNIAK

“You need to do what you can to help members get through these crazy times,” said

pstrozniak@cutimes.com

And according to the Treasury Department’s own metrics, the program works.

Buried deep inside the Trump Administration’s FY21 budget is an evaluation of the CDFI program.

Certification criteria require that all CDFIs originate at least 60% of their loans Y16

magine if the credit union
industry had an army of en-
thusiastic col-
lege students
who thought credit
unions were super
cool. It might be
led by 20-year-old
Sahil Pankhaniya, a
George Washington
University student

who is crazy about the credit union model and believes there can be many more like him after students learn about the movement.

His goal, of course, is to graduate in 2021 with a double major in finance and statistics. But unlike most college students, he has another ambitious goal that may be even more challenging and daunting: To open a new student-run credit union by May 1.

I’m bought into them 100%,” Pankhaniya (pronounced pan-khan-nee-ya) said. “I do want to do something fulfilling with my career, so definitely [a credit union career] is on the table.”

Jeff Stone, CU Business Group’s regulatory and compliance expert based in San Diego.

What’s more, he believes a lot more college students would come to the realization that credit unions are super cool after learning about what makes them different and their mission. To accomplish that exposure on college campuses, Pankhaniya’s Y17

NCUA data showed Member

Stone

Pankhaniya

“Credit unions are super cool, and they have a great mission.

Business Loans accounted for just under 3% of total loans in 2004, and rose steadily even through the Great Recession to reach 7% by 2017. Since then they Y18