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- By Brian Edwards
- Finance
The U.S. Department of the Treasury has initiated a review of certified Community Development Financial Institutions (CDFIs), including the roughly 65 Treasury-certified Native CDFIs operating nationwide, to identify potential violations of applicable law or program requirements.
In an April 27 announcement, Treasury said the review is intended to ensure that CDFIs receiving federal assistance act as proper stewards of taxpayer funds. The agency said it will assess compliance with legal requirements and the terms of CDFI Fund assistance agreements and take action “where appropriate,” consistent with applicable law and program rules.
“CDFIs play a critical role in expanding access to capital in underserved communities,” Treasury Secretary Scott Bessent said in a statement. “CDFIs that engage in predatory practices and take advantage of the very communities they are intended to serve will be reviewed and, where appropriate, held accountable.”
The Native CDFI Network said in a policy update on Friday that Treasury’s announcement did not include details on the scope of the review, what institutions may be required to do to comply, or a timeline for completion. The organization said it is seeking additional information from Treasury and the CDFI Fund.
The review follows an April 9 announcement outlining planned policy changes affecting institutions that receive support through the Treasury’s CDFI Fund. Both announcements were issued under the same headline, though they describe different actions — an April 9 policy update and an April 27 review of certified institutions.
In that earlier release, Treasury said it intends to issue rules clarifying that certain CDFI-funded benefits qualify as “federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which would limit eligibility to U.S. citizens and certain lawful residents.
Treasury also said it will add provisions to CDFI Fund agreements requiring certified institutions to adopt and maintain policies ensuring compliance with federal anti-discrimination laws. The agency said potential remedies for noncompliance could include decertification, termination of awards, or recapture of funds.
The review also follows an April 8 decision by the Office of Management and Budget to clear $289 million in fiscal year 2025 funding for the Treasury’s CDFI Fund, including $28 million for the Native American CDFI Assistance Program.
The funding makes the full FY2025 appropriation available to Treasury for obligation following months of delays that drew scrutiny from tribal leaders, Native CDFIs and lawmakers. Treasury has not announced a timeline for issuing NACA Financial Assistance awards or disbursing funds.
