The Community Development Financial Institutionsprogram is biased toward non-credit union, non-bank grantrecipients that are largely unregulated, seven trade groups,including CUNA and NAFCU said Tuesday.

The groups, including the National Federation for CommunityDevelopment Credit Unions and major banking groups, are askingcongressional appropriators to include language in their FY2018spending bills that reaffirms their intention that the programsupports the entire CDFI sector.

The groups contend that the current CDFI evaluation process usedby the Treasury Department combines all applicants, includingnonprofit loan and venture capital funds into one pool.

That has resulted in unregulated loan funds receiving 81% of allCDFI funds between 1996 and 2016. During that time, regulatedfinancial institutions, including credit unions and banks,represented 50% of all CDFI applicants, the trade groups said.

“The single pool evaluation process creates unintended – butreal – bias that plays to the strengths of the unregulated CDFIsectors while ignoring the strengths of the regulated CDFIs,” thegroups said in their letter.

They added that the Treasury Department has acknowledged theproblem, but needs specific language from Congress to address theissue.

The groups are requesting appropriators to award CDFI using aformula that is “proportional by number to the applicant pool foreach funding round.”

The CDFI program received $248 million for FY2017 when Congresscompleted the funding process earlier this year, even though theTrump Administration targeted the program forelimination.