WASHINGTON — The Defense Credit Union Council (DCUC) is urging the National Credit Union Administration to modernize a range of regulations, arguing that updates are needed to reflect current operating conditions while preserving safety and soundness standards.
In a comment letter submitted as part of the NCUA’s annual review of existing regulations, DCUC outlined recommendations aimed at reducing regulatory burden, increasing operational flexibility and enhancing credit unions’ ability to serve members.
Three Key Principles
According to DCUC, the agency should be guided by three key principles during its regulatory review:
- Ensuring regulations are proportionate to a credit union’s size, complexity and risk profile.
- Periodically evaluating thresholds and requirements to reflect current economic and operational realities.
- Prioritizing principles-based regulations that provide institutions flexibility in how they comply based on their business models.
Among its recommendations, DCUC called for continued support of statutory enhancements to the Central Liquidity Facility, including greater flexibility for corporate credit unions serving as agent members. The trade group also urged the NCUA to raise the current $20,000 board-approval threshold for loans to officials under federal regulations to at least $75,000, saying the existing limit no longer reflects modern lending practices.
Clarification Sought
The organization also requested clarification that director education, certification programs and governance training qualify as reimbursable expenses under NCUA rules. In addition, DCUC reiterated its support for an NCUA proposal that would allow federal credit unions to reimburse volunteer officials for reasonable dependent care expenses incurred while performing official duties.
The letter endorsed the NCUA’s proposed changes to management interlock thresholds and recommended updates to fidelity bond and insurance requirements. Specifically, DCUC proposed increasing deductible limits and extending compliance periods from 30 days to 60 days.
DCUC also called on the agency to replace prescriptive succession-planning requirements with a principles-based approach while retaining existing director competency standards, which it described as an important safeguard for governance and oversight.
Changes Recommended
To expand access to small-dollar lending, DCUC recommended several changes to the NCUA’s Payday Alternative Loan programs, including:
- Increasing loan limits
- Extending maturity options
- Allowing higher application fees to offset operational costs
- Eliminating the one-month membership requirement for PALs I loans.
The organization also requested greater transparency in the NCUA’s investment pilot program, including defined review timelines and additional guidance on eligible activities and collaborative applications.
‘Reducing Unnecessary Burden’
“Collectively, these recommendations outlined in this letter would reduce unnecessary regulatory burden, improve operational flexibility, and strengthen all credit unions’ ability to serve members while maintaining safety and soundness,” DCUC Chief Advocacy Officer Jason Stverak wrote in the letter.
DCUC President and CEO Anthony Hernandez said periodic regulatory reviews are necessary to ensure compliance requirements remain effective and aligned with the industry’s evolving needs.
“DCUC appreciates the NCUA’s ongoing efforts to review and modernize its regulations,” Hernandez said in a statement. “Periodic regulatory reviews are essential to ensure that legal and compliance requirements remain clear, effective, and appropriately tailored to the evolving credit union industry. Our recommendations are intended to provide meaningful flexibility while preserving the strong safety and soundness standards that protect credit unions and their members.”
Changing Operating Conditions
Stverak said the recommendations are intended to help credit unions adapt to changing operating conditions.
“The credit union operating environment continues to evolve, and regulations should evolve with it,” Stverak said. “Whether addressing outdated thresholds, enhancing liquidity access, strengthening volunteer leadership opportunities, or improving small-dollar lending options, these recommendations are designed to help credit unions better meet member needs while supporting the long-term strength of the credit union system.”
DCUC said it may submit additional recommendations as the NCUA’s review continues and encouraged the agency to maintain stakeholder engagement through roundtables, town halls, webinars and other outreach efforts.
