WASHINGTON -
During a congressional hearing on CDFI funding, Bethex FCU CEO Joy Cousminer told her Congressman Jose Serrano, who chairs the House Appropriations Subcommittee on Financial Services, that the CU's South Bronx neighborhood (the poorest in the nation) has benefited from products and services made possible through the CDFI Fund. Cousminer, a well-known figure in the CDCU movement, explained how Bethex, founded in 1970 by welfare mothers, has leveraged millions of dollars in grants and loans from CDFI, NCUA's Community Development Loan Fund, and the National Federation of CDCUs, to fund critical services for poor people, like payday loans, low-cost mortgages, check cashing and international remittances. Bethex recently accepted 20 remittances companies who provide money transfers for the neighborhood as CU members, facilitating their operations and services.
The CDCU figure asked the newly formed Appropriations subcommittee to budget as much as $100 million for the CDFI Fund, almost four times what was proposed by the Bush Administration, which sought to eliminate funding for the program last year.
The CDFI Fund, the brainchild of National Federation of CDCU Director Cliff Rosenthal, was created in 1994 by the Clinton administration and has provided as much as $100 million in grants and loans to almost 100 CUs since then, making CUs a key component of the program.
Cousminer, whose credit union has received as much as $1 million in CDFI assistance over the past decade, said in the early years assistance was used mainly for straight-forward purposes, like increasing loans and establishing reserves. But in recent years, CDCUs like hers and other CDFIs have found increasing challenges financing compliance with the US PATRIOT Act and Bank Secrecy Act, as well as the increased threat of fraud and identity theft. "We also have to concern ourselves with the increased costs of implementing new technologies," she said.
Kimberly Reed, director of the CDFI Fund, told the Congress-members the fund has provided more than $820 million in assistance to credit unions, banks and community development funds across the country, helping them to provide much-needed and innovative financial services and products in America's neediest communities.
NCUA Chair JoAnn Johnson, who was appearing before the panel because it funds appropriations for the agency Community Development Fund, told lawmakers that in many communities credit unions have become a critical provider of services to low- and moderate-income families-also called "underserved"-and the NCUA fund has helped many low-income credit unions by providing low-interest loans and small grants to help them deal with operational issues.
Johnson also took the opportunity to urge the panel-the third reviewing credit unions' role in serving the nation's underserved-to help credit unions reach more of these needy communities by allowing all credit unions to add underserved communities to their fields of membership. A provision to expand NCUA's underserved expansion program to community charters-barred by a recent court ruling-is expected to be in legislation introduced soon in the House, the CU regulatory Improvements Act, or CURIA.
