The detailed budget released by the Trump administration on 23 May suggests changes that would impact on credit unions and co-operatives.
A non-binding document, the budget totals almost USD $4.1tn. As indicated earlier this year, the administration proposes eliminating two crucial credit union funds, the Treasury’s Community Development Financial Institutions (CDFI) Fund and NCUA’s Community Development Revolving Loan Fund (CDRLF).
The administration also calls for a restructuring of the regulatory regime for financial institutions and reviewing tax exemptions, which include credit union tax exemptions.
Official figures from the country’s Credit Union National Association (CUNA) show that of the 1,094 certified CDFIs, 297 are credit unions.
The budget document argues the CDFI programme was created to expand the availability of credit and financial services to low-income people and that the objective has reached.
“Today, with nearly 1,100 Treasury-certified CDFIs, including loan funds, community development banks, credit unions, and venture capital funds active in all 50 states, that goal has been achieved,” it says.
But Jim Nussle, president and chief executive of CUNA, said: “Congress heard CUNA, leagues and credit unions earlier this year when they called for CDFI funding, and continuing that momentum is essential as Congress works toward a funding deal for the next fiscal year.
‘“Our grassroots efforts clearly demonstrated that investing in CDFIs is sound public policy, so we need to stay on the offensive to make sure our priorities stay top of mind.”
Furthermore, the budget proposes restructuring the Consumer Financial Protection Bureau (CFPB).
Dan Berger, chief executive of the National Association of Federally-Insured Credit Unions (NAFCU), said: “NAFCU is pleased that President Trump’s budget proposal does not single out the credit union tax exemption for elimination, and we will continue to work with Congress and the administration to protect the exemption throughout the tax reform process.
“The association also supports CFPB reforms such as bringing the bureau under the congressional appropriations process.
“However, we believe that cutting the CDFI Fund and CDRLF grant programs would be a mistake. CDFI credit unions predominately serve low-income areas and other target markets and are often the only financial services option for consumers that live paycheck to paycheck. The CDFI Fund grant program helps these credit unions better serve their communities, which are often overlooked by other financial institutions.”
He added: “NAFCU will continue to work with Congress to ensure that both the CDFI Fund and the CDRLF grant programs remain intact,” Mr Berger said.
NAFCU is a trade association focusing exclusively on federal issues affecting the nation’s federally insured credit unions.
The budget also suggests dissolving the Rural Business and Cooperative Service, which administers the Rural Cooperative Development Grand programme.
Other programmes such as the Cooperative Development Program (CDP), Food for Peace and the Development Assistance account have a direct impact on NCBA CLUSA’s international development work. The trade body works in Madagascar in four Food for Peace priority regions. In Senegal the NCBA is implementing a Feed the Future project in Yaajeende, helping to reduce malnutrition in children under five by 31% in project area villages.
“From their role in spurring job growth in rural America to achieving food security and resilience in communities worldwide, co-operatives play an important part in sustainable community development,” said Judy Ziewacz, president and chief executive of NCBA CLUSA.
“NCBA CLUSA is committed to preserving these investments and will continue to be a strong advocate for the role of co-operative development in the US and around the world.”
Alan Knapp, NCBA CLUSA’s vice president of advocacy, will continue to monitor developments as Congress reviews the budget proposal in the coming weeks.
“While we’re disappointed in the priorities outlined in the budget proposal,” he said, “NCBA CLUSA is confident that Congress will ultimately recognise the value of co-operative development.
“Now is the time to throw all of our energy and resources into highlighting, defending and ensuring the continuation of the good work co-operatives and their members do.”