WASHINGTON— Credit union trade groups are concerned of heightened risk for the industry after the final conference text of the National Defense Authorization Act (NDAA) dropped two top credit union priorities—the Central Liquidity Facility (CLF) modernization and Community Development Financial Institutions (CDFI) provisions—while Congress also races against the clock to avoid another government shutdown early next year.
The Defense Credit Union Council said the removal of both provisions weakens the financial resilience of the credit union system, particularly for smaller institutions serving military and underserved communities. At the same time, America’s Credit Unions said the broader breakdown in negotiations reflects deeper disagreements in Congress that now threaten both housing policy reforms and the appropriations timeline.
“Obviously, we are deeply disappointed that the final text of the NDAA released last night does not include the two biggest credit union priorities—the Central Liquidity Facility language from Senators (Alex) Padilla and (Kevin) Cramer, and the CDFI language that would protect, extend, and expand that program,” said DCUC Chief Advocacy Officer Jason Stverak. “Both of these are incredibly important to the ability of all credit unions, but especially smaller credit unions, to plan for and thrive in the future, as well as to continue serving communities that many others have left behind.”
Greg Mesack, SVP of advocacy for America’s Credit Unions, and Stverak reminded that the NDAA outcome was the result of unresolved House-Senate disputes over the financial services title.
“The big news is this weekend we finally got text on the conference report for the Defense Authorization Act. It's neither good nor bad for credit unions,” Mesack said. “There were a couple small provisions in there that we had supported…Neither one of those were left in at the end.”
Mesack and Stverak noted that disagreements between House Financial Services Chairman French Hill and Senate Banking Chairman Tim Scott—particularly over inclusion of the ROAD to Housing Act—led negotiators to strip the entire financial services section from the bill.
“So, the larger financial services title was left out and that includes Central Bank digital currency and some other things,” Mesack said. “That doesn't mean they're dead. There's a path forward for all of them.”
Looking ahead, both groups are also closely monitoring federal funding talks as the current stopgap runs out Jan. 30. Stverak warned that credit unions must prepare for another potential government shutdown if Congress cannot complete its work in time.
“January 30 is when the government will once again run out of money,” he said, noting that no “minibus” appropriations packages have yet passed and that divisions remain over Homeland Security funding, including Coast Guard operations that directly affect military-serving credit unions.
While Stverak said he expects some funding bills to advance, he added that it is unlikely all 13 appropriations measures will be completed by the deadline, creating the risk of rolling shutdowns affecting parts of the government.
“As we have done before, when Congress has abdicated its responsibility, credit unions will once again step up,” he said. “We will be there to make sure members are taken care of.”
Mesack similarly pointed to the shrinking window for avoiding disruption.
“We're also still working on appropriations as Senate's trying to put together a package of appropriations bills,” he said. “If they can move another three or four before Christmas; it's less chance of a full shutdown next year…funding runs out in January, so they still have to get a lot done soon to avoid another messy situation.”
Despite the NDAA setback, America’s Credit Unions said housing reform remains alive through separate legislative vehicles, with the House Financial Services Committee expected to mark up its own package next week.
Events In Washington This Week
Wednesday
- The House Financial Services Committee will conduct a hearing on artificial intelligence innovation in financial services
- Wednesday, the House Small Business Committee will conduct a hearing on empowering veteran entrepreneurs
Thursday
- The House Financial Services Committee will conduct a hearing on right-sizing banks’ capital framework