Legislative Update with Kenley

​Credit unions stand by members during the shutdown while advocating for vital liquidity and community funding measures.

By Kenley Lamberty, Director of Political Strategy and Engagement

Government Shutdown Update
As the government shutdown continues, credit unions continue to stand by their members, offering support during both prosperous and challenging times. We are actively encouraging our members of Congress to pass the necessary funding legislation to restore stability and promote financial well-being.

Government Shutdown Assistance Resources
 
CDFI Fund Staff Eliminated Amid Treasury Department RIF Plans
In the ongoing government shutdown, the Trump Administration has initiated a permanent reduction-in-force (RIF) that will eliminate all staff at the Treasury Department’s Community Development Financial Institutions (CDFI) Fund. The layoffs are scheduled to take effect in mid-December and mark the first time a federal office has been entirely dismantled during a shutdown in modern U.S. history.
 
The CDFI Fund has long been a cornerstone of community development finance, supporting mission-driven institutions, including 444 credit unions, the largest group among the 1,375 certified CDFIs as of August 12. These institutions serve low-income and underserved communities through grants, certifications, and access to capital.
 
Senate Passes FY 2026 NDAA with Key Credit Union Provisions
In a strong bipartisan vote of 77–20, the Senate on Thursday approved the Fiscal Year 2026 National Defense Authorization Act (NDAA). The legislation includes the NCUA Central Liquidity Facility (CLF) Enhancements Act, a measure aimed at permanently restoring critical provisions that expand liquidity access for credit unions—particularly benefiting smaller institutions—without imposing costs on taxpayers.
 
The NDAA also features an amendment to bolster the Community Development Financial Institutions (CDFI) Fund, reinforcing support for mission-driven financial institutions serving underserved communities.
 
Introduced by Senators Alex Padilla (D-CA) and Kevin Cramer (R-ND), the CLF enhancements make permanent the temporary liquidity improvements enacted during the COVID-19 crisis, ensuring credit unions retain access to vital financial tools in times of economic uncertainty.
 
Credit Union Advocacy Helps Defeat Harmful NDAA Amendment
A proposed amendment to the National Defense Authorization Act (NDAA), introduced by Sen. Rand Paul (R-KY), was resoundingly defeated in the Senate by a vote of 14–83 following strong opposition from the Dakota Credit Union Association (DakCU) and its members.
 
The amendment sought to prohibit the Federal Reserve from paying interest on reserves, a change that could have disrupted liquidity for financial institutions and impacted services like free checking accounts. It also raised concerns about the Fed’s ability to function effectively in the broader financial system.
 
South Dakota Legislative Session: Key Issues to Watch
As the 2026 South Dakota legislative session approaches, several issues are emerging that could impact credit unions across the state.
 
One area of discussion centers on interchange fees, specifically proposals to remove state taxes from card transaction fees. While framed as a tax relief measure, this concept mirrors legislation passed in Illinois that is now facing legal challenges. We’ll be watching closely to see how this develops and what implications it may have for credit union operations and member services.
 
Another potential issue involves excise taxes on credit unions that purchase bank assets. While no formal bill has been introduced yet, conversations are underway. DakCU will advocate strongly against any such tax, emphasizing that credit union acquisitions add value to the economy, promote financial stability, and foster healthy competition. Taxing these transactions would create unfair advantages for banks liquidating assets, rather than letting the free market operate as intended.
 
We’ll continue to monitor these discussions and engage with lawmakers to ensure credit unions remain empowered to serve their members and communities effectively.
 
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