N.Y. Federal Reserve: Credit Unions Fueling Increase in CDFIs

Learn what the report attributes the impressive rise in the number CDFI certified credit unions to.

David Baumann


Aug 10



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David Baumann

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David Baumann

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Report cites Emergency Capital Investment Program as potential driver of growth.

Credit unions are fueling the rapid rise of Community Development Financial Institutions, the Federal Reserve Bank of New York said in a new report Wednesday.

Between 2019 and 2023, the number of CDFI credit unions grew from 290 to 529, according to Jacob Scott, Maria Carmelita Recto and Jonathan Kivell, the authors of “Sizing the CDFI Market.”

The researchers also reported that between 2019 and 2023, 239 of the 402 newly certified CDFIs were credit unions, with 88 of those headquartered in Puerto Rico.

Backstory and Context

The CDFI Fund is currently going through a blackout period, as Treasury Department officials study possible changes to the application and certification process.

Credit union trade groups and members of Congress have said they are concerned that any new process could disqualify current CDFIs from being recertified as well as make it more difficult for financial institutions to attain certification.

Inside the Report

The N.Y. Fed researchers said an important question is how newly certified institutions meet the reporting and compliance standards required by fund officials.

“Critically, will these institutions be able to maintain their designation and serve the low- and moderate-income communities they are required to serve?” they asked. “Related to this is the question of how the industry will evolve. Will it continue to see an increase in the number of CDFIs and the assets they hold?”

In the study, the researchers additionally reported that:

–As of the first quarter of 2023, the CDFI industry had at least $425 billion in total assets, with credit unions holding $300 billion, banks holding $118 billion and loan funds holding $35 billion.

–While credit unions hold the highest share of total assets, loan funds make up the largest share of certified CDFIs—at 39%.

–The rapid growth in CDFIs in Puerto Rico might be attributed to the Puerto Rico CDFI Initiative, an effort led by Inclusiv, along with other organizations.

–Of the ten largest CDFIs in terms of asset size as of the first quarter of 2023, seven were credit unions and three were banks.

Reasons For Growth

The researchers said that the pandemic-related Emergency Capital Investment Program may have contributed to the growth in CDFIs. That program provided $9 billion directly to CDFIs and MDIs to encourage expanded lending to low- and moderate-income communities.

They noted further that while many newly certified institutions did not receive awards from that program, it did raise the profile of CDFIs and demonstrated that having a certification might open access to government support in future crises.

Moving forward, the N.Y. Fed also announced that its community development team intends to examine the origination and sale of various types of loans originated by CDFIs.


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