CUNA Comment Letter

Comment on Certification of Entities as CDFI

February 25, 2008

Certification and Training Manager
CDFI Fund
U.S. Department of the Treasury
601 13th Street, NW – Suite 200 South
Washington, DC 20005

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the process involved in certifying an entity as a Community Development Financial Institution (CDFI). CDFIs are a unique class of institutions that receive certain benefits and it is very important that the certification process be comprehensive, yet efficient.

CUNA represents approximately 90 percent of our nation’s 8,400 federal and state-chartered credit unions, representing over 90 million members.

Primary Mission Criteria

CUNA supports public policies designed to eliminate or reduce predatory lending. We do not believe, however, that the CDFI Fund (Fund) should define “predatory lending,” nor should it establish any set criteria that would identify certain activity as predatory. Instead, we believe that the Fund should address such concerns on a case-by-case basis.

Financing Entity Criteria

We believe that establishing a minimum level—such as the number of transactions or years of operation of an institution—is inappropriate. Each institution applying for certification should be assessed on an individual basis. Additionally, we believe that the Fund should somehow certify pre-charter credit unions in order to make much-needed start-up funds more available to them.

Target Market Criteria

As with the other certification requirements, we believe that the Fund should use a liberal view in examining target market criteria. Ideally, we would encourage the Fund to focus on all aspects of an applying institution. Additionally, an institution’s certification should carry over to any new target market area it enters, so long as it has a history of providing appropriate financial services to a targeted market. Such a “carry over” should also apply to merging CDFI credit unions. Also, we believe that with the advancement of technology physical presence—while desirable—should not be a requirement.

Accountability Criteria

In terms of accountability, credit unions should be given wide latitude in determining the size and structure of a governing board. Credit unions should be able to directly elect members to their boards. There should not be a number requirement for members of such a board. The Fund should also expand the ways in which board members can be deemed representative of a target market.

Development Services Criteria

We agree with the concept that CDFIs should provide development services to their members. We do not agree, however, with establishing specific criteria to satisfy this requirement. Nonetheless, if such criteria are established, we urge the Fund to refrain from linking these requirement criteria to certain products. Such a process would be overly restrictive and unnecessary. Additionally, due to the wide range in size of institutions, requiring some minimum level of service would be inappropriate.

Non-Governmental Entity Criteria

In regard to governmental control, unless it is certain that an institution is under conservatorship of a regulator, the Fund should allow certification. A credit union is generally guided by its board of directors—who are entirely responsible for all its actions—and is thus clearly not under direct governmental control.

CDFI Certification Application Process

We encourage the Fund to make the application process as easy and efficient as possible. Allowing applicants to use both the internet and the traditional paper process would help a variety of applicants. Also, CDFI certification status should be extended indefinitely, rather than for a fixed period. Whether or not a CDFI requests an award from the Fund should have no bearing on its continued certification.

Thank you for the opportunity to comment on the certification process for Community Development Financial Institutions. If you have any questions about our comments, please contact Senior Vice President and Deputy General Counsel Mary Dunn or myself at (202) 638-5777.

Sincerely,

Luke Martone
Regulatory Research Counsel