Emphasizing the importance of inclusivity within the credit union community to blunt the economic effects of the pandemic, the chairman of the federal credit union regulatory agency on Tuesday encouraged credit unions to submit applications to a Treasury program created to support services in communities traditionally excluded from the financial system.
The program, Treasury’s Emergency Capital Investment Program (ECIP), began taking applications March 4 and will continue taking them until May 7. Treasury says the program will eventually invest $9 billion community development financial institutions (CDFIs) and minority depository institutions (MDIs), supporting their efforts to provide financial products for small and minority-owned businesses and consumers in low-income and underserved communities.
Todd Harper, chairman of the National Credit Union Administration (NCUA) Board, discussed the program as part of his keynote message Tuesday before a town hall hosted by Inclusiv, whose mission the NCUA says is to help low- and moderate-income people and communities achieve financial independence through credit unions.
“Many minority-owned businesses and communities have been acutely affected by the suddenness and depth of the economic shock resulting from the lockdowns that were put in place to contain the spread of the virus,” Harper said. “By staying focused on diversity, equity, inclusion, and social justice, credit unions can help ease the financial impact of COVID-19 and systemic racism on communities of color. And the end result will be a more vibrant economic outcome for everyone in society.”
Harper discussed economic equity and justice as well as minority depository institution preservation. Along that line, Harper discussed the ECIP, which he said “aligns with the mission of the credit union movement to expand access to affordable financial services free of discrimination to those of modest means.” The NCUA hosted a webinar on the program last month. Noting the $9 billion cap on program funding, Harper said Tuesday that “time is of the essence” for qualifying credit unions wishing to apply.
Congress created the ECIP as part of the Consolidated Appropriations Act, 2021, to help community-based financial institutions support consumers and local small businesses in low-income and underserved communities that have been disproportionately affected by the economic effects of the COVID-19 pandemic. A federally insured credit union must be CDFI-certified or an MDI to participate in the program.
Of the ECIP’s $9 billion, $2 billion will be set aside for CDFIs and MDIs with less than $500 million in assets; and an addtional $2 billion for those with less than $2 billion in assets.