Budget Proposal Again Nixes CDFI Funding, Brings CFPB into Appropriations Process

The Trump Administration has released additional details for the president's proposed budget for fiscal year 2020 (FY2020). The proposal shows similarities between previous ones including elimination of the Community Development Financial Institutions (CDFI) Fund, bringing the Consumer Financial Protection Bureau (CFPB) under the appropriations process, increasing government-sponsored enterprises' (GSEs) guarantee fees and reforming the National Flood Insurance Program (NFIP).

CDFI Fund
Similar to the administration’s FY2018 and FY2019 budget proposals, the FY2020 proposed budget eliminates funding for the CDFI Fund's grant programs, though it would provide $14 million to cover existing commitments and administration of the CDFI Fund's other programs.

CUNA and the state leagues have continued to highlight to Congress the importance of grants provided to credit unions through the CDFI Fund to better serve low-income members and underbanked communities. Full CDFI funding was included in the government funding package passed in February. 

CFPB Funding
The proposed budget seeks to increase the CFPB's accountability by bringing it under the congressional appropriations process by 2021, a reform long-advocated for by CUNA and the state leagues. The bureau currently receives its funding through the Federal Reserve. The budget also recommends cutting the bureau's mandatory funding in 2020 by $23 million, with further reductions increasing in subsequent years.

In addition, the budget proposal recommends bringing the Financial Stability Oversight Council's (FSOC) budget under the congressional appropriations process but not FSOC member agencies such as NCUA. 

Housing Finance
The FY2020 budget proposal would increase the additional fee GSEs charge on their usual guarantee fees from 0.1 percentage point to 0.2 percentage point and extend it through 2024.

The budget would also eliminate the GSEs' allocations to the Housing Trust Fund and Capital Magnet Fund which provide funding for affordable low-income housing. In addition, the proposal requests $20 million to modernize the Federal Housing Administration's information technology systems, which will be financed by a "modest new fee on FHA lenders," potentially increasing costs for credit unions and borrowers to make and obtain FHA loans.

CUNA and the state leagues have fought to maintain credit unions’ equal access to the secondary mortgage market. Fee increases have the potential to make utilizing the secondary market impractical for some credit unions. 

National Flood Insurance Program (NFIP)
The NFIP's Flood Hazard Mapping Program would have its discretionary appropriation reduced by about $163 million under the proposed FY2020 budget.

The House Financial Services Committee recently met to discuss NFIP reauthorization. Committee Chair Maxine Waters (D-Calif.) has released draft legislation that would reauthorize it for five years. The Administration has also indicated it is changing pricing under the NFIP to take into account the cost to rebuild structures, as well as other factors.

Small Business Administration (SBA)
The FY2020 budget proposal requests $820 million in new budget authority, about a 17 percent increase from the 2019 estimate. The budget also recommends amending the SBA increase the loan limit for 7(a) express loans from $350,000 to $1,000,000.