WASHINGTON—The Defense Credit Union Council (DCUC) has sent a letter to Scott Bessent, President-Elect Donald Trump’s Treasury Secretary Nominee, that outlines the benefits of credit unions and the key issues impacting the industry.
“DCUC is doing everything on behalf of our members and all credit unions to make sure members of the incoming administration have the information on the issues facing credit unions on day one,” said DCUC Chief Advocacy Officer Jason Stverak.
The “pressing” issues facing the industry, as outlined by Stverak in DCUC's letter:
The Unique Mission and Structure of Credit Unions
“Credit unions are not-for-profit, member-owned financial cooperatives that exist solely to serve their members. This fundamental distinction from for-profit banks underscores the need for a separate regulatory framework. The Federal Credit Union Act of 1934 codified this distinction, recognizing that credit unions operate under a unique charter to promote thrift and provide access to affordable financial services.
“Unlike banks, credit unions return earnings directly to their members in the form of lower loan rates, higher savings rates, and reduced fees. According to the Credit Union National Association (CUNA), credit unions generated $16.2 billion in direct financial benefits for their members in 2022 alone. This cooperative structure inherently limits risk-taking behavior and aligns the interests of the institution with those of its members, justifying a regulatory approach tailored to their unique operational model.”
Protecting Credit Union Tax-Exempt Status
“Credit unions’ tax-exempt status is vital to their mission and structure as member-owned, not-for-profit institutions. This status allows credit unions to provide lower-cost financial services, higher returns on savings, and better loan rates to their members. Proposals to revisit or eliminate this status jeopardize the affordability of financial services for millions of Americans, including service members and their families.
Safeguarding Against Overregulation
“While we support strong oversight to protect consumers and the financial system, excessive regulatory burdens can limit credit unions’ ability to focus on member services. We urge your department to balance oversight with operational flexibility, ensuring that credit unions are not unnecessarily hampered by compliance costs.”
Preserving NCUA Independence and Share Insurance Coverage
“The independence of the National Credit Union Administration is a cornerstone of credit union governance. Any proposals to restructure or combine share insurance systems with other entities would undermine credit unions’ unique structure and erode member confidence.”
Addressing the Impact of Credit Card Interchange Fee Regulations
“Recent proposals to cap or alter credit card interchange fees pose a direct threat to credit unions’ ability to provide low-cost services and rewards programs to their members. These changes would
disproportionately impact smaller institutions, including defense credit unions, which cannot absorb the revenue losses as easily as larger financial entities.”
Expanding Veteran Member Business Lending Exemptions
“Defense credit unions are uniquely positioned to assist veteran entrepreneurs by providing capital and advisory support. However, outdated limitations on member business lending restrict our ability to fully support these initiatives. Expanding the exemption for veteran loans would provide much-needed financial support to those who served our country.”
Opposing Community Reinvestment Act (CRA) Expansion
“Credit unions were established to serve their members, not to meet mandates designed for for-profit banks. Expanding CRA requirements to credit unions is unnecessary and counterproductive, as credit unions already prioritize serving underserved communities without such mandates.”
Advocating for Financial Readiness of Service Members
“Our nation’s service members face unique financial challenges, including deployments, frequent relocations, and the potential for predatory lending practices. Credit unions provide critical financial education and tailored products to address these challenges. Collaboration with the Department of Defense and Treasury to enhance financial readiness would benefit the military community and improve overall mission readiness.”