Federation Defends CDCI Program
The National Federation of Community Development Credit Unions has defended a Treasury program from charges that politics played a role in how it distributed money to CDCUs.
Calling itself "the primary technical advisor" to the credit unions that applied for money under the Treasury's Community Development Capital Initiative, the federation countered charges that had been raised against the program by an economist who has critically studied the Troubled Asset Relief Program. Treasury funded CDCI loans with money from TARP.
Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette, had charged that CDCUs in districts represented by federal legislators on the House Financial Services Committee received money in higher proportion than CDCUs that were not in those districts.
But the federation pointed out that Wilson had not taken into account the number of credit unions that actually been awarded money (72) versus the number that had elected to receive it (48) or the number of credit unions that had actually applied for the money (111) versus those eligible to apply--189 in Wilson's view, though the federation took issue with that number as well.
Federation CEO Cliff Rosenthal said the federation's critique of CDCI had more to do with its limiting factors.
"The onerous application process, the regulatory burden, the fear of political attacks, and other factors resulted in relatively little being invested in the only group of financial institutions that are specifically committed to serving low-income individuals and communities," Rosenthal wrote in a statement countering Wilson's charges.