WASHINGTON— The Defense Credit Union Council (DCUC) is urging the National Credit Union Administration (NCUA) to undertake a comprehensive review of its capital framework, warning that credit unions risk falling behind banks as federal regulators move to modernize capital standards across the broader financial system.
In a March 20 letter to NCUA Chairman Kyle S. Hauptman, DCUC said recent efforts by banking regulators to streamline and recalibrate capital requirements could expand lending capacity for banks, potentially putting credit unions at a competitive disadvantage if similar changes are not considered.
“Credit unions play a critical role in supporting financial readiness for servicemembers, veterans, and their families,” the organization said in a separate statement announcing the letter. “It is essential that they are not placed at a competitive disadvantage as the broader regulatory environment evolves.”
Push for Parity
DCUC’s Chief Advocacy Officer Jason Stverak said the issue is particularly important for credit unions serving military communities, where borrowers often face unique financial pressures tied to relocations, housing transitions and income variability.
In the letter, Stverak pointed to a recent initiative by federal banking regulators to modernize capital requirements, including efforts to better align capital with risk and potentially reduce aggregate capital levels while maintaining safety and soundness.
He warned that if banks gain additional lending flexibility under revised standards while credit unions remain under existing rules, the result could be reduced credit availability for military families and diminished competitiveness for member-owned institutions.
Five Recommendations
DCUC called on the NCUA to take five specific actions as part of a potential overhaul of its capital and net worth framework:
- Conduct a comprehensive review of current capital requirements
- Explore more risk-sensitive approaches to align capital with actual risk
- Seek stakeholder input through an Advance Notice of Proposed Rulemaking
- Coordinate with federal banking regulators to maintain consistency
- Prioritize flexibility to support mission-driven lending, particularly for military communities
The group said such steps would help ensure that credit unions can continue to lend responsibly while maintaining strong capital positions.
Balancing Flexibility and Safety
DCUC emphasized that its proposal is not aimed at weakening oversight but at modernizing the framework to reflect current economic conditions and regulatory changes affecting other financial institutions.
“Credit unions are built on a model of long-term stability and member service,” the organization said. “Ensuring a modern, balanced capital framework will allow them to continue meeting the evolving needs of those who serve our nation.”
The group added it stands ready to work with NCUA leadership to provide data and field-level insights from defense-focused credit unions as the agency considers potential changes.
