Proposals to consolidate financial regulators bring grave threats to America’s financial ecosystem and consumers’ financial stability

Recent discussions to fold or eliminate key financial regulators, as reported by the Wall Street Journal, raise profound concerns about the future financial stability and well-being of America’s consumers. Merging the National Credit Union Administration (NCUA) into broader regulatory frameworks recklessly undermines the unique role credit unions have long served in our Nation’s economy. Advocates of these proposals, whether intentionally or through misguidance, are overlooking the distinct purpose and proven track record of the NCUA in favor of a hollow promise of “efficiency.” As President of the Defense Credit Union Council,  I cannot stress enough how a failure to preserve a strong, independent NCUA will upend the stability of credit unions and the communities they serve—especially service members and veterans. DCUC continues its sixty-plus years of identifying and addressing policies and regulations that have the potential to jeopardize the financial well-being of these important financial institutions, their members, and dedicated, people-serving missions.

Credit unions are not banks and calls to eliminate or merge financial regulators like the NCUA is a troubling trend: policymakers prioritizing large financial institutions at the expense of community-focused alternatives. As member-owned, not-for-profit institutions, credit unions exist to serve their members, not shareholders. The NCUA’s independence is crucial in recognizing and upholding this distinction, governing credit unions through a unique cooperative model that demands a tailored oversight.

Proponents of consolidation claim it will streamline bureaucracy, but we believe this is a fantasy. Combining the NCUA with agencies like the FDIC or OCC would force credit unions into a “one-size-fits-all” regulatory model, undermining their ability to provide affordable, member-driven services and is ill-suited to their mission. The result? Higher costs for credit union members reduced access to financial services, and the erosion of a sustained decades-long ecosystem that has served the financial needs of underserved, rural, or vulnerable communities across America.

The NCUA has proven its value as a guardian of financial stability, with a long history of protecting members’ deposits and promoting financial well-being through its management of the National Credit Union Share Insurance Fund (NCUSIF). During the 2008 financial crisis, while banks required massive government bailouts, credit unions weathered the storm with far less disruption thanks to the NCUA’s prudent management of the NCUSIF. This provided a stable backstop for members’ deposits, reinforcing public trust in credit unions.

Consolidation threatens to dilute the NCUA’s focus into a broader regulatory framework that could disrupt the specific needs of credit unions, the NCUSIF’s efficacy, and leave consumers more vulnerable during economic downturns. Credit unions have long championed financial inclusion, offering affordable services to underserved communities, including military families, veterans, and those in rural areas who often lack access to traditional banking services. The NCUA’s mission aligns closely with these goals, fostering the growth of credit unions that prioritize financial equity.

Would a merged regulator prioritize the needs of credit unions over demands from for-profit megabanks? History suggests otherwise. The 2010 dissolution of the Office of Thrift Supervision (OTS) caused many institutions formerly regulated by the OTS to struggle to adapt and showed how consolidation creates confusion, inefficiencies, and increased risks for consumers. Absorbing the NCUA into a larger agency would repeat these mistakes on a larger scale, endangering the 140 million who rely on credit unions.

This shift would marginalize credit union members, stripping millions of American’s access to low-cost loans, competitive rates, and personalized service. This is not “efficiency,” it’s a direct assault on financial equity.

The stakes couldn’t be higher. A strong and independent NCUA is essential to preserving the integrity of the credit union system and ensuring a diverse, resilient financial landscape. A robust NCUA ensures that credit unions remain a vibrant and competitive alternative to banks, driving innovation, promoting financial inclusion, and safeguarding the interests of members.

Policymakers must resist ill-advised changes to the regulatory landscape that bring false efficiency. I urge our nation’s leaders to recognize the critical role the NCUA plays in safeguarding inclusion and stability within the financial ecosystem.

This fight isn’t about protecting a regulatory agency, it’s about protecting the American people. We must stand firm against proposals to dismantle the NCUA and instead prioritize the needs of communities over all else. Anything less would be a disservice to the 140 million Americans that depend on credit unions and the resounding ethos the credit union movement still operates from today: “people helping people.”