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President Donald Trump Monday released his proposed budget for fiscal year 2021. Similar to previous budgets, the president recommends eliminating the Community Development Financial Institutions (CDFI) Fund and bringing the CFPB under the congressional appropriations process, but also proposes ways to strengthen anti-cybercrime efforts.

CDFI Fund

In all four of his proposed budgets, Trump has tried to eliminate funding for CDFI Fund awards as they "are no longer needed given the maturity of the CDFI industry." The FY2021 budget also does not request appropriations for the Community Development Revolving Loan Fund (CDRLF). Congress provided funding for these two and other programs used by credit unions in the FY2020 government spending packages passed in December; those funds are currently set to expire Sept. 30.

NAFCU witness Mara Falero in October shared with Congress credit unions' efforts to serve Americans in low-income and underserved communities. Falero urged Congress to fully fund the CDFI Fund as the grants it provides are important tools for credit unions to serve their members.

Appropriations process

The proposed budget again seeks to increase the CFPB's accountability by bringing it under the congressional appropriations process by 2022 – a change advocated for by NAFCU. The bureau currently receives its funding through the Federal Reserve. The budget also recommends a significant cut – $110 million – to the bureau's mandatory funding in 2021, 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 would not apply directly to the council's members, which includes the NCUA.

Financial crimes

The FY2021 budget proposes moving the U.S. Secret Service from the Department of Homeland Security to the Treasury Department in an effort to strengthen counterfeit and cybercrime investigations. Trump suggests a $127 million allocation for Treasury's Financial Crimes Enforcement Network's (FinCEN) Bank Secrecy Act (BSA)/anti-money laundering (AML) efforts, as well as targeted investments to disrupt terrorist financing and deter financial crimes.

NAFCU has actively sought BSA/AML regime improvements and relief for credit unions. The House in October passed two bills related to suspicious activity report (SAR) filings, currency transaction reports (CTRs), regulatory coordination and innovation, and beneficial ownership reporting. The association continues to urge the Senate to take up similar legislation. In addition, the association works closely with FinCEN to ensure credit unions are aware of regulatory changes and trends.

Housing finance

Consistent with the Department of Housing and Urban Development's housing finance reform plan released in September, the proposal requests $20 million to modernize the Federal Housing Administration's information technology systems; unlike last year, the proposal doesn't indicate how that allocation would be financed.

In addition, Trump again recommends eliminating the government-sponsored enterprises allocations to the Housing Trust Fund and Capital Magnet Fund, which provide funding for affordable low-income housing. The proposal would also 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 2025; NAFCU has fought to maintain low guarantee fees in order to ensure equal access to the secondary mortgage market.

NAFCU is a leader in housing finance reform efforts to ensure credit unions' undeterred access to the secondary mortgage market. The association has met with administration officials, Congress, and regulators on the issue.

Small business lending

In the new budget proposal, Trump reduced his requested budget authority for the Small Business Administration (SBA) to $739 million, though he still plans to offset this increase by allowing the SBA "flexibility to set an upfront fee across its business loan programs."

NAFCU witness Gail Jansen in April 2019 advocated against SBA loan program fee increases during congressional testimony, cautioning that doing so could "make it more difficult to get in SBA loan" in high-cost markets. The FY2020 budget enacted in December included funds to prevent fee increases.

NAFCU will continue to work with the administration and Congress to ensure credit union priorities are appropriately funded.