Comment Letter: CDFI Target Market Assessment Methodologies
December 19, 2022
Michelle Dickens, Program Manager
Office of Certification Policy and Evaluation
CDFI Fund, U.S. Department of Treasury
500 Pennsylvania Avenue NW
Washington, DC 20220
Re: Request for Public Comment: CDFI Target Market Assessment Methodologies
The National Association of State Credit Union Supervisors (NASCUS)[1] submits this letter in response to the Community Development Financial Institutions Fund (CDFI) request for comments regarding pre-approved Target Market assessment methodologies.
The CDFI Fund has issued two requests for public comment in recent months. The CDFI Certification Application, November 4, 2022, [2] and CDFI Target Market Assessment Methodologies, October 20, 2022.[3] While this letter is primarily in response to the Target Market assessment methodologies, NASCUS will take this opportunity to address the CDFI Fund overall.
The mission of the CDFI Fund is closely aligned with that of credit unions. The Fund’s mission is… “to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers.”[4] Credit unions were founded on the principles of “people helping people.” The key word from the mission of the CDFI Fund and that of credit unions is “people.”
CDFI funding is an essential tool for many credit unions that are focused on delivering financial services to low-income and otherwise marginalized communities. While we appreciate the intent of the CDFI Fund’s proposal to increase transparency and verify funding is reaching targeted markets, we believe that absent further refinement, the pre-approved Target Market methodologies as proposed would in fact diminish the provision of financial services, loans, and investments to the very communities the CDFI Fund seeks to aid.
Specifically, several of the proposed pre-approved methodologies require such granular, specificity of data as to be impractical for some financial institutions. Whether limited by regulations such as Regulation B, by practical considerations such as remote loan applications, or by an increasingly racially blended society, it can be difficult to satisfy the pre-approved methodologies. The CDFI Fund should allow for pre-approved methodologies that provide for proxy data to establish the Target Market.
The process should be scalable and workable for each institution, no matter the size or complexity. Additionally, those institutions that are CDFI-designated should not find themselves in a position where they cannot execute their mission to serve underserved communities.
Thank you for the opportunity to provide our comments on this important proposal. NASCUS recognizes the difficulty of developing clear and specific guidelines for the approval of applicants seeking CDFI certification. While specific standards achieve efficiency and equity, we believe they need to be balanced with the more important objective of encouraging credit unions to seek and maintain CDFI certification without barriers and provide resources to the communities in which they serve.
Sincerely,
Sarah Stevenson
Vice President, Regulatory Affairs
[1] NASCUS is the professional association of the nation’s forty-five state credit union regulatory agencies that charter and supervise over 1900 state credit unions. NASCUS membership includes state regulatory agencies, state-chartered and federally-chartered credit unions, and other important stakeholders in the state system. State-chartered credit unions hold over half of the $2.2 trillion assets in the credit union system and are proud to represent nearly half of the 129 million members.
[2] Community Development Financial Institutions, CDFI Certification Application, 87 Fed. Reg. 66786
[3] Community Development Financial Institutions Fund; CDFI Target Market Assessment Methodologies, 87 Fed. Reg. 63852
[4] U.S. Department of Treasury Community Development Financial Institutions Fund; https://www.cdfifund.gov