Legislative Update with Kenley

Government shutdown; NCUA policy changes; CFPB oversight; and a proposed NDAA amendment impacting credit unions.

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. You can find America's Credit Union's Government Shutdown Assistance Resources here. 
 
No Regulation by Enforcement at NCUA
We thank National Credit Union Administration (NCUA) Chairman Kyle Hauptman for announcing the agency’s “no regulation by enforcement” policy. We’ve consistently engaged the NCUA in opposing this type of approach due to the uncertainty and confusion it creates for credit unions.

The acknowledgement that no enforcement action should set, or even clarify, NCUA policy is a win for the industry. Official rulemaking processes ensure transparency and trust between regulators, covered institutions, and consumers.
 
Dakota Credit Union Opposes NDAA Amendment That Threatens Liquidity
Dakota Credit Union members voiced strong opposition to a proposed amendment to the National Defense Authorization Act (NDAA) introduced by Sen. Rand Paul. The amendment would prohibit the Federal Reserve from paying interest on reserves—a move that could significantly impact the 12,000 credit unions currently holding interest.

Such a change could affect liquidity, free checking accounts, and the Fed’s ability to operate effectively in the free market. The amendment is unlikely to pass, lacking the 60-vote threshold and facing opposition from Senate Banking Committee Chairman Tim Scott.
 
America’s Credit Unions Urges CFPB to Exercise Appropriate Supervision of Nonbanks
In response to the Consumer Financial Protection Bureau (CFPB)’s proposed rule on the legal standard applicable to its supervisory designation proceedings, America’s Credit Unions submitted comments to share concern that the proposal improperly narrows Congress’s intent for the CFPB to supervise nonbanks that pose risks to consumers.

Adoption of the proposed standard of “high likelihood of significant harm to consumers” rather than the statutory language of “poses risks to consumers” would lead many nonbank entities to be outside the scope of regulatory supervision, placing consumers at risk and creating the potential for regulatory arbitrage that favors fintechs and other nonbanks while disadvantaging credit unions.
 
NCUA Proposes Significant Budget Reduction
The NCUA released draft 2026–2027 budgets, with a 20.6% decrease proposed for 2026. We’ve shared concerns about the NCUA’s year-over-year budget increases, and this reduction is mostly due to reduced staff, employee travel, and contracted services.

We will continue to advocate for transparency and efficiency in the NCUA’s budget to ensure safety and soundness of the industry.

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For more information or to share your perspectives, feel free to contact me.