President Donald Trump released his proposed budget for fiscal year 2019 Monday that recommends, among other things, bringing the CFPB under the congressional appropriations process, eliminating the Community Development Financial Institutions (CDFI) Fund, increasing government-sponsored enterprises' (GSEs) guarantee fees and reforming the National Flood Insurance Program (NFIP).
The proposed budget seeks to increase congressional oversight of the CFPB by bringing it under the congressional appropriations process by 2020 – a change advocated for by NAFCU. The bureau currently receives its funding through the Federal Reserve. The budget also recommends cutting the bureau's mandatory funding in 2019 by $147 million, with further reductions increasing in subsequent years.
In addition to reducing the CFPB's funding, Trump's budget would also restrict the bureau's enforcement authority in order "to prevent actions that unduly burden the financial industry and limit consumer choice."
Community Development Financial Institutions (CDFI) Fund and Community Development Revolving Loan Fund (CDRLF)
Similar to Trump's FY2018 budget proposal, he recommends eliminating funding for the CDFI Fund's grant programs, citing that "the CDFI industry has matured." It would provide $14 million for 2019 to cover existing commitments and administration of the CDFI Fund's other programs.
The proposed budget also calls for the elimination of the NCUA's Community Development Revolving Loan Fund (CDRLF), which provides grants and loans to low-income designated credit unions.
NAFCU has urged Congress to fully fund the programs to ensure credit unions can continue to provide financial stability for low-income members and their families, as CDFI credit unions predominantly serve low-income areas and are often the only financial services option.
Fannie Mae and Freddie Mac
Trump's FY2019 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 2023. Although the administration argues that the increased fee "would help to level the playing field for private lenders seeking to compete with the GSEs," NAFCU has fought to maintain low guarantee fees in order to ensure equal access to the secondary mortgage market. By increasing the fee, it is likely to impede some credit unions' access to the secondary market.
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.
NAFCU will continue working with the administration, Congress and the Federal Housing Finance Agency to ensure the association's core principles for housing finance reform are part of reform discussions and solutions.
National Flood Insurance Program (NFIP)
The NFIP's Flood Hazard Mapping Program would have its discretionary appropriation reduced by about $78 million under the proposed FY2019 budget. The budget recommendation also suggests ways to increase efficiency in the program, including by "incentivizing increased State and local government investments in updating flood maps to inform land use decisions and reduce risk."
NAFCU has pushed for a number of improvements to the NFIP, including increases in coverage limits and capping premiums and rates. The association will continue to share with the administration and Congress its proposed improvements to the NFIP, which are supported by member credit unions.