Reshuffled DC Deck Presents Challenges, Opportunities for Defense Credit Unions

Why does it feel like everything is on the table and up for grabs in DC these days? Because that’s exactly what’s going on in Our Nation’s Capital. And for defense credit unions, and all credit unions, the very real possibility of major changes at federal regulatory agencies is keeping DCUC on its toes in an effort to keep up with (and hopefully influence) those major changes in the coming weeks and months.

An obvious place to start cataloging the changes is at the Consumer Financial Protection Bureau. CFPB has been in the news lately, and with good reason. As expected, the Trump Administration has begun an overhaul of the controversial consumer agency. By dismissing Biden-appointee Rohit Chopra and in short order installing newly minted Treasury Secretary Scott Bessent, and later incoming Office of Management and Budget Director Russell Vought as Acting Director, President Trump has followed through on his campaign promise to rein in CFPB.

Among the first moves by Team Trump at CFPB was to issue a stop-work order to the agency’s supervisory and enforcement teams. This included a directive to cease litigation by CFPB’s attorneys, both in suing alleged wrongdoers as well as defending against incoming lawsuits—like the one challenging CFPB’s rule covering overdraft protection programs. This regulation applies to credit unions and other financial institutions with total assets of $10 billion or more and limits the cost of overdraft services to the amount of actual costs or a fee cap of $5. The rule is set to take effect on October 1, 2025, and is under legal challenge in the Southern District of Mississippi.

Vought also took aim at CFPB operations. He deleted its X account, disabled its homepage, and closed the agency’s offices beginning February 10 as he began a top to bottom budgetary and personnel review. Of even more potential significance was Vought’s plan to shut off funding, announcing CFPB would no longer draw on the Federal Reserves coffers. In a statement Vought said CFPB’s present $711.6 million in reserves were “excessive in the current fiscal environment” and he vowed to operate the Bureau in a manner “consistent with the President’s priorities.”

One possible ramification: Capitol Hill allies of CFPB, most notably the Bureau’s architect Elizabeth Warren, have resisted Republican calls for CFPB to be subject to the normal Congressional Appropriations process. With automatic, unchallenged Fed funding a thing of the past, Warren and Hill Democrats may be forced to go to Congress for future dollars, a move some Washington observers termed “3-D chess.” DCUC has supported reforms in CFPB funding, something that may be coming to pass.

This CFPB drama is playing out against a backdrop of bigger, more significant regulatory changes for credit unions. DCUC advocacy staff has learned that both Senate and House Republican financial services committee members, in concert with the Trump Administration, are formulating plans to consolidate federal financial regulators as part of an overall effort to streamline the federal bureaucracy.

Hill sources say NCUA, along with federal banking regulators (FDIC and OCC) plus the Federal Housing Finance Agency are all under consideration as candidates for possible inclusion in a new “super regulator.” The new entity presumably would be responsible for chartering, safety and soundness supervision, and most importantly deposit insurance.

​This would obviously concern credit unions, as losing an independent regulator and insurer and being placed in a bank dominated structure would be problematic if not downright dangerous. While this melding of regulatory functions has been proposed in the past, notably during the construction of the 2010 Dodd-Frank Act when former Fed Chairman Paul Volcker tried strenuously to create a single, unified federal agency with sweeping financial oversight powers, this time could be different. And more dangerous for credit unions.