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Home Community Banking

ABA: Proposed reporting changes could harm CDFI Fund mission

August 25, 2025
Reading Time: 2 mins read
Report: Republicans push back against proposed cuts to CDFI Fund

A proposal to require Community Development Financial Institutions Fund recipients to report certain supervisory violations risks blurring the separation between regulatory oversight and mission-driven certification, the American Bankers Association said today in a letter to Treasury Secretary Scott Bessent.

The Treasury Department recently proposed several revisions to the form that CDFI Fund recipients use to report material events, which are events that may constitute a violation of its certification terms. Among the proposals is a provision to require recipients to notify the fund when they receive a CAMELS composite rating of three or below. In its letter, ABA said CAMELS ratings are confidential supervisory tools designed exclusively for use by federal bank regulators to assess the overall safety and soundness of insured depository institutions, and that they are not intended for disclosure outside the supervisory framework.

“It is important to emphasize that CAMELS ratings, particularly those of three or four, often reflect operational, compliance or technical matters that do not necessarily impair a bank’s ability to meet its mission as a CDFI,” ABA said.

ABA also objected to language requiring recipients to report any negative or adverse finding by their regulatory agency, saying it is overly broad and may create confusion regarding materiality. The association instead recommended changing the requirement to apply only to regulatory findings that contribute to a CAMELS composite rating of five. “This would allow the fund to be appropriately informed of significant developments while avoiding excessive or duplicative reporting obligations,” it said.

ABA also raised broader concerns about tying supervisory matters to mission, saying such a move could jeopardize important sources of capital to communities. “Given the role that CDFI certified banks play in delivering responsible and inclusive financial services in underserved markets, any change that may inhibit their participation warrants careful review,” it said.

Tags: CAMELSCDFICommunity development
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