DCUC Urges Hill To Consider CUs In New Community Banking Plan (CUToday, November 14, 2024)

WASHINGTON—The Defense Credit Union Council (DCUC) is encouraging French Hill (R-AR) to consider credit unions in his new community banking plan.

Hill, who has been positioning himself to lead Republicans on the House Financial Services Committee, has introduced a plan titled "Make Community Banking Great Again."

DCUC Chief Advocacy Officer Jason Stverak sent a letter to Hill that not only asks for credit union consideration in the legislation, but also outlines credit union priorities.

Stverak urged Hill to expand his vision for community based financial institutions to include specific reforms to grow and support credit unions.

“As you know, credit unions play a unique and indispensable role in our financial system, often serving areas and populations that community banks may not reach. This includes rural communities, underserved urban neighborhoods, and members of our armed forces and their families,” wrote Steverak. “Currently, America faces an alarming increase in banking deserts—areas where traditional bank branches have closed, leaving residents without access to essential financial services. According to a 2022 FDIC report, nearly 4.5% of U.S. households were unbanked, with rural areas and low-income communities disproportionately affected. While banks have been cutting branches, reducing their footprint by over 11,000 branches since 2008, credit unions have been stepping in, opening new branches and providing essential services where they are needed most. Notably, when banks sell branches to credit unions, these locations often remain open and maintain their vital connection to the community, preserving jobs and access to financial services that might otherwise be lost.”

Stverak emphasized credit unions’ support for the active military, veterans and their families.

“Defense credit unions often operate on military bases worldwide, providing tailored financial services such as low-interest loans, deployment-related assistance, and financial education programs. These institutions play a vital role in ensuring financial readiness for our military personnel and offer an essential lifeline to those stationed in remote or underserved locations. Overseas, credit unions are sometimes the only available financial institutions, ensuring continuity of service for military families,” Stverak wrote.

“Moreover, credit unions’ contributions to the broader financial ecosystem are significant,” continued Stverak. “They offer competitive rates on loans and savings, reinvest profits into member services, and act as a counterbalance to for-profit financial institutions. In a time when large banks are consolidating and reducing local access, credit unions and community banks step in to fill the void, keeping financial services anchored in the communities that need them most.”

CU Considerations
Stverak outlined credit union “considerations” for a broader proposal:

• Modernizing Credit Union Legislation: “Passing veterans member business lending legislation to expand credit unions' capacity to serve our military families and small business entrepreneurs, many of whom are struggling to access traditional sources of credit. According to SBA data, small business loans from banks have decreased by over 20% in the past decade, leaving a significant gap in available credit. Credit unions, however, are constrained by outdated business lending caps that limit their ability to meet this need.”
  
• Protecting Credit Union Independence: “Preserving the National Credit Union Administration as an independent regulator, ensuring that credit unions are not swept into overregulation designed for for-profit banks.”
  
• Resisting Harmful Regulation: “Opposing proposals to expand the Community Reinvestment Act (CRA) to credit unions, as their mission already aligns with serving underserved and low- income populations without additional regulatory burdens.”
  
• Ensuring Fairness in Interchange Fees: “Blocking efforts to alter the current credit card interchange system, which would disproportionately harm small financial institutions, including credit unions, and limit their ability to offer affordable services to members.”

Letter To McHenry, Waters
Separately, DCUC has sent a letter to Chairman Patrick McHenry (R-NC) and Ranking Member Maxine Waters (D-CA) of the House Financial Services Committee ahead of its hearing titled "Oversight of Prudential Regulators," urging the Committee to protect the independence of the National Credit Union Administration.

DCUC stressed that NCUA's independence is essential to maintaining the mission and unique structure of credit unions, particularly those serving military and veteran communities.

Stverak, in the letter to McHenry and Waters, also highlighted the risk posed by proposals to consolidate financial oversight under a single regulator, citing that one-size-fits-all regulations historically have burdened credit unions with excessive compliance costs. "While advocating for NCUA’s independence, DCUC proposes reforms to enhance NCUA’s effectiveness. These include increasing budget transparency, investing in modernization, adopting a balanced regulatory approach, and enhancing collaboration with the Department of Defense to better support military families," DCUC said. “As the Committee conducts oversight of prudential regulators, we urge you to recognize the importance of NCUA’s independence and its role in preserving the unique value of credit unions. By adopting the reforms outlined above, NCUA can continue to provide tailored, effective oversight while supporting the mission-driven focus of credit unions serving communities across the nation,” Stverak wrote.