The Defense Credit Union Council, (DCUC), provided its comments to the Senate Committee on Banking, Housing, and Urban Affairs ahead of the Committee’s hearing with Federal Reserve Chair Jerome Powell.
In its letter, DCUC outlines key policy concerns and recommendations aimed at protecting the financial well-being the 40 million+ credit union members – including servicemembers, veterans, and their families.
“Defense credit unions play a critical role in promoting financial readiness and delivering affordable services to those who serve our country,” says Jason Stverak, DCUC Chief Advocacy Officer. “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.”
DCUC’s letter listed nine policy priorities critical to the credit union mission:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. Preserving the Credit Union Tax Exemption: DCUC 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.
7. 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.
8. 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.
9. Support for the Veterans Member Business Loan Act (VMBLA): DCUC 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.
As the Committee explores monetary policy and regulatory issues with Chair Powell, DCUC urges lawmakers to keep credit unions—especially those serving military families—front of mind.
“Each of these priorities plays a part in building a resilient, inclusive, and consumer-focused financial system,” says Anthony Hernandez, DCUC President/CEO. “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.”