WASHINGTON–The Defense Credit Union Council is reporting it has learned of a proposed amendment to the National Defense Authorization Act that would continue to exclude credit unions from the statutory definition of a “Community Financial Institution” from the Federal Home Loan Bank Act.
The amendment is from Sen. Catherine Cortez Masto (D-NV).
“There are many lessons learned from COVID-19 lockdowns which are relevant as we continue to rebuild our economy—essentially, we need more access to credit from safe and secure financial institutions,” said Tony Hernandez, president and CEO of the Defense CU Council. “DCUC believes credit unions, in addition to community development financial institutions, should be added to the statutory definition of ‘Community Financial Institutions’ under the Federal Home Loan Bank Act.
A ’Rich Tradition’
“Credit unions have a rich tradition of serving in communities where there are no other financial institutions available,” Hernandez added.
DCUC said it will be sending a letter to Congress in support of credit unions.
Caution Encourged Over P2P Rules
Meanwhile, DCUC is urging a House Committee to proceed cautiously on any new rules related to Zelle.
In a letter sent ahead of a House hearing by the Committee on Homeland Security & Governmental Affairs Permanent Subcommittee on Investigations titled “Instant Payments, Instant Losses: Zelle and the Big Banks Fail to Protect Consumers from Fraud,” DCUC said how many credit unions and their members are using Zelle for its ability to send and receive money through an optimized secure network, with over 99.9% of Zelle transactions completed without a report of fraud or scam.
In its letter, DCUC argued Zelle “enables them to transfer funds directly from their credit union to individuals at other financial institutions, a necessity given their frequent deployments and inability to meet face-to-face.”
‘Alerts’ Sent
Added DCUC Chief Advocacy Officer Jason Stverak, “Credit unions offering Zelle send alerts and reminders before payments are finalized, helping to prevent scams. This includes validating the recipient’s first name and notifying the sender that the payment is irrevocable. Zelle and its participating financial institutions, including our member credit unions, are dedicated to making Zelle the safest P2P service available to our servicemembers through a multi-layered approach that identifies, intercepts, and removes bad actors.”
Where Policymakers Should ‘Focus’
The Defense Council told the House committee that while scams are not unique to Zelle and affect all payment forms, it believes policymakers should focus on partnering with industry stakeholders and collaboratively enacting effective solutions for identifying and preventing scams.
“This approach will help preserve consumer confidence in the financial system while allowing innovative and fully regulated payment solutions to continue to be part of the financial ecosystem,” the letter states.
ACU Expresses Support for Bill
Separately, legislation to expand business lending opportunities for veteran small business owners and veteran entrepreneurs will help the veteran community, wrote America’s Credit Unions ahead of a joint subcommittee hearing with the House Small Business Committee and House Veterans’ Affairs Committee.
ACU President/CEO Jim Nussle urged the committees to look for ways to support H.R. 4867, the Veterans Member Business Loan (MBL) Act, which would exempt from the credit union member business lending cap loans made to veteran-owned businesses.
“Credit unions stand ready to serve our veterans who so faithfully served our nation,” wrote Nussle. “Congress should act on H.R. 4867, so our veterans do not face arbitrary restrictions when seeking affordable lending products to start to grow their small business.”