WASHINGTON — The Defense Credit Union Council is urging Congress to address restrictions on credit union business lending and membership eligibility as lawmakers consider broader legislation intended to expand access to capital for small businesses and communities.
DCUC outlined its priorities to the House Financial Services Subcommittee on Financial Institutions ahead of a Sept. 18 hearing on the Main Street Capital Access Act, according to the organization.
The council said it supports provisions of H.R. 6955 that would provide regulatory relief to credit unions but argued that additional changes are needed to address barriers that can prevent credit unions from serving veteran-owned businesses and underserved communities.
“Regulatory relief alone will not solve the access problem if credit unions remain legally prohibited from serving communities that need financial services,” said Jason Stverak, DCUC’s chief advocacy officer.
Veteran Business Lending Among Priorities
Among DCUC’s priorities is passage of the Veterans Member Business Loan Act, H.R. 507 and S. 110.
The legislation would exclude certain loans to veteran-owned businesses from the statutory credit union member business lending cap, allowing credit unions to make additional qualifying loans without those loans counting against the limit. Congressional records show H.R. 507 was introduced to amend the Federal Credit Union Act to exclude extensions of credit made to veterans from the definition of a member business loan.
DCUC said the legislation would not eliminate underwriting, capital, supervision or safety-and-soundness requirements.
The council has previously argued that the existing member business lending cap can restrict credit unions seeking to finance veteran-owned businesses.
DCUC also called for modernization of field-of-membership rules to give qualified federal credit unions greater opportunities to seek National Credit Union Administration approval to serve underserved communities.
Under the council’s proposal, credit unions would remain subject to NCUA review and would have to provide a credible plan for serving those communities.
Stverak said lending authority and membership eligibility should be viewed as complementary parts of expanding financial access.
DCUC Seeks Broader Credit Union Package
DCUC President and CEO Anthony Hernandez said Congress could pursue reforms for community banks while separately addressing statutory restrictions affecting credit unions.
“Main Street businesses, veteran entrepreneurs and underserved communities benefit when responsible financial institutions have the ability to compete and serve them,” Hernandez said.
He said the two types of financial institutions do not necessarily require identical legislative treatment but argued Congress should provide each charter with a path for serving its communities.
DCUC identified several other areas it believes should be included in future credit union legislation, including assistance with cooperative charter formation and capitalization, permanent modernization of the Central Liquidity Facility, expanded authority involving credit union service organizations and financial technology partnerships, and more predictable application and merger-review processes.
Those priorities are consistent with recommendations DCUC made earlier this year when it endorsed the Main Street Capital Access Act while calling for a subsequent legislative package focused specifically on credit unions.
Supports Examination Changes
DCUC said it supports portions of H.R. 6955 dealing with regulatory tailoring, examinations, indexed regulatory thresholds and periodic reviews of regulatory requirements.
“We support the provisions of H.R. 6955 that provide meaningful relief to credit unions, including regulatory tailoring, examination reforms, indexed thresholds, and regulatory review provisions,” Stverak said.
DCUC specifically backed Section 303, which it said would allow qualifying well-managed and well-capitalized federally insured credit unions with $6 billion or less in assets to alternate between full-scope and limited-scope examinations and, in some cases, combine examinations that otherwise would be conducted separately.
DCUC previously said the provision is intended to reduce examination duplication while maintaining safety-and-soundness oversight.
The Main Street Capital Access Act was introduced as H.R. 6955 in January and referred to the House Financial Services Committee.
DCUC said it intends to continue working with lawmakers and regulators on the proposals.
“We are prepared to work with Congress and regulators on technically sound, bipartisan solutions that expand financial access while maintaining strong supervision and preserving the member-owned credit union model,” Stverak said.
