WASHINGTON, DC (July 15, 2026) |
The Defense Credit Union Council (DCUC) today called on U.S. Treasury Secretary Scott Bessent to immediately suspend and withdraw a new Community Development Financial Institutions (CDFI) Fund requirement that would force certified institutions to submit a new certification application every five years. DCUC warned that the recurring process will discourage credit union participation and reduce resources available to military, rural, low-income, and economically distressed communities.
In a July 14 letter to Secretary Bessent, DCUC Chief Advocacy Officer Jason Stverak challenged Section 5.19(a) of the CDFI Fund’s May 2026 revised Certification Agreement. The provision limits certification to five full, consecutive fiscal years and directs a certified CDFI to reapply at the end of its fourth full fiscal year. DCUC said this is a substantive, recurring condition on program participation and should not proceed without a clear public rationale, meaningful stakeholder engagement, and evidence that the added burden produces a corresponding public benefit.
“Accountability is not the issue; duplication is,” said Jason Stverak, DCUC Chief Advocacy Officer. “Certified CDFIs already submit annual compliance and transaction-level reports and remain subject to continuing review and enforcement. Requiring every compliant institution to start over every five years adds cost and uncertainty without a demonstrated benefit. Treasury should pause this mandate, explain its rationale publicly, and use the data and risk-based oversight tools it already has.”
Certified CDFIs are already required to file annual certification and data reports, provide transaction-level lending information, disclose material events, maintain supporting records, and respond to additional information requests. The CDFI Fund also may conduct desk or on-site reviews, make noncompliance findings, and terminate certification. DCUC argued that a universal full reapplication duplicates those existing safeguards instead of directing scrutiny toward institutions presenting an actual compliance risk.
DCUC also raised concerns about the impact on smaller and midsize credit unions. The revised certification framework requires institutions to assemble and validate detailed lending data, demonstrate compliance with Target Market benchmarks, document mission and accountability requirements, analyze responsible financing practices, and secure executive and board-level review. These tasks consume substantial staff time and frequently require outside data, legal, or consulting support.
The letter cites observations from CU Strategic Planning, which works with hundreds of credit unions. The firm reported that more than a dozen client institutions voluntarily declined to pursue recertification because the administrative burden had become disproportionate to the benefits. It also reported an approximately 22 percent decline in the number of certified credit unions appearing on the CDFI Fund’s published lists between January and June 2026. DCUC stressed that these institutions had not abandoned their community-development missions; rather, the compliance burden changed the cost-benefit calculation of maintaining federal certification.
“CDFI credit unions turn federal partnership into tangible results safe emergency loans, affordable housing finance, capital for veteran and military-spouse businesses, and trusted financial counseling in communities that larger institutions often do not reach,” said Anthony Hernandez, DCUC President and CEO. “When unnecessary bureaucracy causes a credit union to leave the program, the harm does not remain on a compliance spreadsheet; it reaches military families, rural communities, and low-income households. Financial readiness is inseparable from military readiness, and federal policy should expand not constrict the network of institutions doing this work.”
CDFI certification can serve as an eligibility gateway to federal awards and technical support that help credit unions expand affordable small-dollar lending, first-time homeownership and housing finance, small-business capital, branches and access points in banking deserts, and financial education tailored to the realities of military life. DCUC warned that a smaller and less diverse CDFI network will mean fewer safe alternatives to high-cost lenders, less capital for locally owned businesses, and diminished capacity to serve rural and low-income communities near military installations.
DCUC asked Treasury to:
Suspend and withdraw Section 5.19(a), pause all five-year reapplication clocks, and restore continuing certification for institutions that remain compliant.
Rely on annual reporting and risk-based oversight, reserving a full reapplication for material organizational changes, demonstrated noncompliance, or a substantive change in certification standards.
If periodic renewal is retained, streamline it by prepopulating information already held by the Fund, requesting only new or changed information, and preserving certification and award eligibility while a timely renewal remains under review.
DCUC also requested a prompt meeting with Treasury, CDFI credit unions, and other affected stakeholders before the Fund takes further implementation steps. The Council said credit unions can help design a framework that protects program integrity without driving capable, mission-focused institutions out of the program.