Hauptman to Congress: Credit unions balancing innovation, access, safety

Expressing support for credit union efforts to enter the digital assets market and continued financial literacy efforts, NCUA Chairman Kyle Hauptman testified before the House Financial Services Committee Thursday. Hauptman also urged Congress to focus on regulatory relief to ensure a “unique, diversified” financial system that includes credit unions of all sizes and types.

“Regulation falls hardest on the smaller institutions, yet we’re a better, more prosperous country because of the unique American financial system that still contains over 8,000 banks and credit unions,” he said. “Many of them serve niche communities and industries in a way that no one else does, but laws and regulations are often written as if all of them can afford expensive compliance departments.”

Committee members from both parties expressed the need for regulatory relief for community financial institutions. Rep. Vicente Gonzalez, D-Texas, has sponsored bipartisan legislation to increase lending to veteran-owned businesses, expand small business lending, and allow more credit unions to join the Federal Home Loan Bank system.

“These bills are about empowering credit unions to responsibly support local economies while maintaining strong protections for their members,” he said at the hearing, and asked Hauptman about if credit unions can continue innovating to reach a wide range of populations. 

Hauptman agreed and reiterated his support of a diverse credit union system, saying, “I think we are a better, more prosperous country because we do have banks that know soybeans and credit unions that know the Broadway industry in New York, for example. We want to have every nook and cranny of this country covered with a financial institution that meets its needs.”

Rep. Tim Moore, R-N.C., who has introduced several regulatory relief bills passed by the committee, shared his opposition to one-size-fits-all regulations and support for modernizing various thresholds. He asked what steps NCUA is taking to ensure regulatory tailoring

Hauptman said the NCUA has done a “true top to bottom” review of outdated and burdensome regulations over the last 18 months, including through the agency’s Deregulation Project, and said the agency is working to make sure examiners are aware that “doing new things in a different way is positive as an insurer.”

House Republican Conference Chair Lisa McClain, R-Mich., shared concerns about debanking, and asked Hauptman about efforts under the previous administration in support of regulation by enforcement.

“Regulation by enforcement to me is unethical. No one in this room would tolerate it in any other part of their life,” Hauptman said, adding that NCUA has a specific policy that “no enforcement ever sets policy.”

America’s Credit Unions wrote to the committee in advance of the hearing on several issues before the committee and regulators.