Washington, DC (January 10, 2025) |
Today, the Defense Credit Union Council (DCUC) formally requested meetings with each NCUA Board member to address critical issues impacting credit unions and the military communities they serve. Following the release of NCUA’s 2025 Supervisory Priorities, DCUC Chief Advocacy Officer Jason Stverak outlined key observations and concerns in a letter to NCUA Chairman Todd Harper, specifically on cybersecurity, liquidity risks, balance sheet management, consumer financial protection, and the Military Lending Act (MLA).
Stverak provided that DCUC supports the prioritization of cybersecurity but cautions against mandatory third-party audits that could strain resources. DCUC believes a balanced, scalable approach is essential to address varying risk levels across credit unions.
Pertaining to liquidity risks, Stverak stressed that the removal of liquidity risk from NCUA’s priorities raises concerns, noting how ongoing economic uncertainty and market vitality threaten credit union safety and soundness. DCUC urged the NCUA to reinstate liquidity risks as a top supervisory priority for 2025.
While recognizing the importance of earnings and net worth, DCUC requested clearer guidance on NCUA’s expectations for risk mitigation with balance sheet management.
DCUC also emphasized the need for consistent guidance, particularly regarding overdraft programs and the Military Lending Act, to align regulations with the realities of credit union operations and members’ needs.
DCUC questioned the inclusion of MLA compliance as a top priority, providing that there is no evidence of significant risks to members or the Share Insurance Fund.
“We are not aware of any trends that would cause compliance with Military Lending Act requirements to pose “the highest risk” to credit union members, the industry, or the Share Insurance Fund. Thus, it was surprising to see the Military Lending Act listed as a top priority,” Stverak wrote. “Especially when the NCUA’s Payday Alternative Loan (PAL) is above the mandated 36% rate cap in the Military Lending Act. We highly recommend NCUA take a closer look at how the Military Lending Act discriminates against military borrowers since no other
class of borrowers suffers the same restrictions on its ability to obtain safe and secure lines of credit. DCUC has long advocated for changes to this law.”
DCUC shared how certain MLA provisions unintentionally disadvantage military borrowers, such as restrictions on share-secured loans and classifying auto loans with Guaranteed Asset Protection (GAP) insurance as ‘unsecured.’
DCUC detailed its efforts to address MLA-related challenges, including raising concerns with the Department of Defense and Congressional leaders about restrictions that limit servicemembers’ access to affordable credit. Stverak outlined specific issues with the MLA, including limitations on share-secured loans due to outdated core processor systems, and GAP insurance provisions that deter credit unions from offering critical protections to military members. DCUC also stressed that these restrictions expose servicemembers to greater risks from predatory lenders and reduce their financial options.
Reaffirming its commitment to working collaboratively with NCUA, Stverak requested individual meetings with each NCUA Board member to discuss these concerns in depth and provide constructive feedback to address challenges in implementing these priorities.
“We appreciate NCUA’s efforts to adapt its supervisory framework to emerging risks,” says Anthony Hernandez, DCUC President/CEO. “Our main goal here is to assist the NCUA in implementing policies that balance the safety and soundness of defense credit unions and their members while avoiding unnecessary overregulation. Together, we can ensure a fair, balanced approach that empowers credit unions while promoting the financial readiness and well-being of our military and veteran communities.”
For more information, please contact Jason Stverak at jstverak@dcuc.org and visit dcuc.org/advocacy.