The Defense Credit Union Council isn’t mincing words: proposed changes to bank capital requirements could end up hurting the very people they’re meant to protect.
And they want Congress to pump the brakes before anyone does something they’ll regret.
In a letter sent to House Financial Services Committee leaders this week—timed ahead of a full committee hearing with the delightfully bureaucratic title “Prioritizing Main Street: Evaluating the Impact of Capital Proposals on Economic Growth and American Communities”—DCUC laid out its case for why these capital proposals need a serious reality check.
Here’s the core issue: when federal regulators tinker with how much capital big banks need to hold in reserve, it sends ripples through the entire financial system. Credit unions, which operate under completely different rules and serve a different mission, could find themselves caught in the crossfire. Think collateral damage, but for your local credit union’s ability to offer affordable mortgages.
What DCUC Is Actually Asking For
The credit union council isn’t opposing strong regulation—they’re asking for smart regulation. Their letter spells out four concrete recommendations that deserve attention:
- Show us the math first. Before finalizing any capital rule changes, federal banking agencies should conduct a joint analysis showing the cumulative impact on everything from mortgage lending to small business loans to market competition. No surprises, no unintended consequences.
- Don’t punish traditional lending. Keep capital rules risk-sensitive so that bread-and-butter lending activities—like helping military families buy homes or backing veteran-owned businesses—don’t get squeezed out of the market.
- Base requirements on actual risk, not just size. Adjustments to capital surcharges for massive banks (the “too big to fail” crowd) should reflect genuine systemic risk, not just automatic increases because the economy happened to grow.
- Remember credit unions play by different rules. Conduct an interagency review to understand how bank capital changes might affect credit unions, which operate under a completely separate statutory framework with a member-focused mission.
Why This Matters Beyond the Beltway
“Congress must ensure that any changes to capital requirements are driven by data and not arbitrary recalibration, and do not come at the expense of credit unions serving Main Street and military communities,” says Anthony Hernandez, DCUC President and CEO (and retired USAF Colonel, because of course). “If these proposals move forward without a full understanding of the cumulative impact, the result could be reduced access to affordable credit for the very households and small businesses policymakers are trying to support.”
Translation: Well-intentioned regulations could accidentally make it harder for regular people to get affordable loans. That’s the definition of an own goal.
Jason Stverak, DCUC’s chief advocacy officer, drives the point home: “Credit unions operate under a distinct, mission-driven model that prioritizes access, affordability, and member service. Any shift in the broader capital framework must account for those differences to avoid tilting the playing field and limiting the ability of credit unions to meet the needs of servicemembers, veterans, and local communities.”
The Bigger Picture
What DCUC is really advocating for here is something that sounds simple but rarely happens in Washington: taking a step back to look at the full picture before making major changes. Different regulators have different opinions on how these proposals might affect financial system resilience, which is policy-speak for “we’re not all on the same page here.”
The council made sure to request that their letter be included in the official hearing record, and they’ve reaffirmed their commitment to working with both Congress and regulators on finding balanced solutions. The goal? A financial system that supports economic growth and consumer protection while keeping affordable financial services accessible to servicemembers, veterans, and everyone else trying to build a life on Main Street.
Because at the end of the day, capital requirements are just numbers on a spreadsheet—until they determine whether a military family can afford that first home or a veteran can get financing for a small business. That’s when the spreadsheet meets the real world, and that’s exactly what DCUC is trying to protect.
Related:
DCUC Urges NCUA to Review Capital Framework to Maintain Competitiveness
Everything Credit Unions Going On in Washington with DCUC’s Stverak