WASHINGTON–Ahead of Fed Chairman Jerome Powell’s testimony before the Senate, the Defense Credit Union Council, (DCUC), provided its comments to the committee in which it outlined its key policy concerns and offered some recommendations.
Separately, America’s Credit Unions sent a letter to the Hill outlining changes it would like to see at the CFPB.
“Defense credit unions play a critical role in promoting financial readiness and delivering affordable services to those who serve our country,” Jason Stverak, DCUC chief advocacy officer, said in a statement. “We are asking lawmakers and the Federal Reserve to consider how current and future policies will impact these vital institutions and the people they serve.”
Nine Priorities
DCUC’s letter listed nine policy priorities it said are “critical” to the credit union mission, including:
Interchange Regulation (Reg II)
“DCUC urges lawmakers to recognize the unintended consequences of overregulating debit and credit card interchange fees. Further restrictions—such as those proposed in the “Credit Card Competition Act”—would hurt smaller institutions and ultimately penalize consumers with fewer rewards and higher fees.”
FedNow, Support Real-Time Payments for All
“DCUC commends the Federal Reserve’s FedNow Service, which enhances financial access through 24/7 real-time payments. Defense credit unions are already connecting to the system; can be especially beneficial for military families needing instant access to funds. DCUC believes continued collaboration and affordability for smaller institutions is key to maximizing FedNow’s impact,” the association said.
Liquidity Access
“DCUC supports restoring and permanently authorizing corporate credit unions’ ability to serve as agents for the Central Liquidity Facility (CLF). This measure—vital during the COVID-19 pandemic—should be reinstated to ensure all credit unions, regardless of size, have access to emergency liquidity during crises.”
Opposition to a Retail Central Bank Digital Currency (CBDC)
“DCUC strongly cautions against implementing a retail CBDC, citing risks of deposit flight, privacy invasion, and cybersecurity threats. With effective private-sector payment innovations already in place, the Council views a retail CBDC as a solution in search of a problem.”
Enhancing Federal Reserve Transparency
“DCUC supports increased transparency in the Federal Reserve’s regulatory and supervisory functions without compromising its independence. More clarity helps credit unions better plan and comply with evolving requirements.”
Preserving the Credit Union Tax Exemption
DCUC said it “reaffirms its support for the credit union tax exemption, a policy that allows not-for-profit, member-owned institutions to return value to members through better rates and lower fees. Revoking this status would undermine the financial health of communities, especially those underserved and vulnerable, including military families.”
Opposition to Extending CRA Requirements to Credit Unions
“DCUC opposes applying the Community Reinvestment Act (CRA) to credit unions, given their member-driven, not-for-profit model inherently serves underserved populations—often better than for-profit banks do. Imposing CRA would only add regulatory burdens without measurable benefits.”
Cybersecurity, A National Security Priority
“DCUC stresses the need for continued federal investment in cybersecurity, particularly to support small- and medium-sized institutions. Grants, technical assistance, and collaboration through public-private partnerships are crucial to strengthening defenses against growing cyber threats.”
Support for the Veterans Member Business Loan Act (VMBLA)
DCUC said it “strongly backs this bipartisan bill, which would exempt veteran-owned small business loans from the current cap on credit union member business lending. This targeted change would expand access to capital for veteran entrepreneurs without compromising safety or soundness.”
‘Consumer-Focused System’
“Each of these priorities plays a part in building a resilient, inclusive, and consumer-focused financial system,” DCUC President and CEO Anthony Hernandez said in a statement. “We’re proud to represent our member credit unions, and we look forward to working with Congress and the Federal Reserve to ensure their mission and dedication to serve continues to drive impact in America’s communities.”
America’s CU Sends Letter on CFPB
Meanwhile, America’s Credit Unions sent a letter to the House Financial Services Committee Subcommittee on Oversight and Investigations ahead of a hearing focused on the CFPB in which it offered a number of recommendations.
“For too long, community financial institutions have been under a regulatory onslaught that has forced many to close or merge,” Jim Nussle, the trade group’s president and CEO, wrote.
In the letter, America’s Credit Unions said Nussle sought to highlight “the regulatory burden instituted onto credit unions by recent actions taken by the Bureau,” with the letter pointing specifically to implementation of Section 1071.
“We have concerns about how the CFPB has chosen to carry out its authority under Section 1071,” Nussle wrote. “The overly broad scope of the CFPB’s final rule will increase burdens on community lenders and raise the cost of small business borrowing. It will also require covered financial institutions to collect data on businesses that are not ‘small businesses’ by any traditional metric. This rule adds new burdens on both lenders and small businesses well beyond what the statute intended.”
America’s Credit Unions has expressed support for H.R. 976, which would formally repeal the Section 1071 final rule.
Recommendations Offered
The ACU letter recommends a series of legislative changes, including:
- Moving the leadership to a bipartisan commission;
- Increasing Congressional CFPB oversight;
- Providing greater clarity on UDAAP;
- Expanding and clarifying exemptions for credit unions from the CFPB;
- Raising the $10 billion threshold for institutions subject to greater CFPB oversight;
- Increasing CFPB usage of cost-benefit analysis and SBREFA panels; and
- Reforming the Civil Investigative Demand (CID) process.
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