NASCUS Legislative and Regulatory Affairs Committee
September 2025
Consistent with Executive Order (EO) 14281, Restoring Equality of Opportunity and Meritocracy,” the NCUA has issued LTCU 25-CU-04 removing references to disparate impact liability from its “Fair Lending Guide.” The NCUA is also removing references in other issuances and has directed examiners to no longer request, review, or conclude on or follow up on:
- Matters related to a credit union’s disparate impact risk,
- Internal disparate-impact risk analysis, or
- Disparate-impact risk assessment processes or procedures.
Supervisory processes will continue to include fair lending risk assessments and the analysis of HMDA data for potential evidence of disparate treatment.
NASCUS Legislative and Regulatory Affairs Committee
September 2025
In response to Executive Order (EO) 14331, Guaranteeing Fair Banking for All Americans, the NCUA has issued Letter to Credit Unions (LTCU) 25-CU-05. The LTCU notifies federally insured credit unions (FICUs) that, effective September 25, 2025, the Agency will no longer be utilizing reputation risk and equivalent concepts in the examination and supervisory process, nor will they refer to or engage in discussions about reputation risk as part of examinations and supervision contacts of a credit union or CUSO.
The NCUA will continue to include key review areas historically classified under reputation risk, like financial liability associated with litigation and insider abuse, as part of an examination as necessary.
The agency is reviewing and updating its regulations, manuals, guidance, and training materials to remove references to reputation risk. The LTCU notes that until these resources are updated, this LTCU supersedes any previous information related to reputation risk.
Justification Summary
NASCUS Legislative and Regulatory Affairs Department
September 30, 2025
The National Credit Union Administration (NCUA) has published its proposed budget[1] for fiscal years 2026 and 2027, marking a significant shift toward streamlined operations and fiscal prudence. This year no public briefing has been set to offer comments; however, interested parties may provide comments on the budget, as published in the Federal Register[2], until October 24, 2025. While NASCUS refrains from commenting on a peer regulatory budget, concerns continue regarding the development and implementation of the Overhead Transfer Rate (OTR), which will be addressed in its own review process.
The overall budget, which includes the Operating Budget, Capital Budget, and Share Insurance Fund Administrative Expenses Budget, reflects a concerted effort to align with federal efficiency mandates. At the office level, most NCUA departments face budget and staffing reductions, with the Office of the Executive Director and Office of External Affairs and Communication seeing the largest proportional cuts. Despite these reductions, the agency prioritizes crosscutting investments in IT and modernization to support its mission.
In 2026, the total proposed budget stands at $313.8 million, a notable 20.6% decrease from the previous year. This reduction is largely attributed to a 23% cut in staffing, a 34% decline in contracted services, and a 13% decline in travel expenses. These changes stem from the agency’s reorganization under the President’s Department of Government Efficiency initiative, which included a Voluntary Separation Program that saw 262 employees depart. The 2026 budget supports 967 positions, with flexibility to rehire up to 23 roles as needed.
The 2027 budget is projected at $344.7 million, representing a 9.8% increase over 2026 but still 12.8% below 2025 levels. This growth accounts for inflation and a reduction of surplus funds from prior years. The proposed 2027 budget is $1.9 million higher than the proposed 2026 level largely because of the $1.7 million in proceeds from the sale of the Austin, TX building that offsets the 2026 budget. When excluding this one-time revenue, the 2027 budget increases $150,000, or 3 percent, compared to the 2026 level.
The Operating Budget for 2026 is set at $292.4 million, with 82% allocated to employee compensation and benefits. Contracted services are budgeted at $24 million, supplemented by $44.8 million in prior-year surpluses. Travel, rent, and administrative costs are all trimmed to reflect the agency’s leaner structure.
Capital investment projections total $18.1 million in 2026, targeting key upgrades including a $3.2 million enterprise computer refresh, $2.9 million in enhancements to the MERIT examination platform, and $1 million for a new customer relationship management system. Additional funds support IT infrastructure and minor headquarters maintenance.
The Share Insurance Fund Administrative Expenses Budget is reduced to $3.3 million, aided by proceeds from the sale of the Austin, TX office. These funds support stress testing, examiner training, and insurance-related operations.
To finance its operations, the NCUA relies on a combination of the Overhead Transfer Rate[3] (OTR) and operating fees. Based on the Board-approved methodology and the proposed budget, the OTR for 2026 is estimated to be 61.8 percent, which is an increase of one basis point from 2025. Thus, 61.8 percent of the total 2026 Operating Budget is estimated to be paid out of the Share Insurance Fund. The remaining 38.2 percent of the Operating Budget is estimated to be paid for by operating fees collected from federal credit unions. The operating fee rate[4] is reduced by 23.6%, thanks to surplus funds and asset growth.
NASCUS continues to believe that while improvements in the methodology to apply expenses to the NCUSIF through the OTR have been instituted, there remain legitimate talking points regarding further improvements to ensure the appropriateness of the allocation of expenses between the two programs. At this time, the NCUA Board has not scheduled an open hearing to receive verbal input on the proposed budget. NASCUS will notify membership once a public hearing date has been announced.
NASCUS will be providing comments to NCUA regarding the proposed budget. NASCUS members should provide suggested comments to SVP John Kolhoff by October 15, 2025.
[1] www.ncua.gov/files/publications/budget/budget-justification-proposed-2026-2027.pdf
[2] 90 FR 46640
[3] On November 16, 2017, the NCUA Board adopted a new methodology for calculating the OTR starting with the 2018 OTR. 82 FR 55644, November 22, 2017.
[4] See https://www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedulemethodology
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By monitoring legislation across federal and state arenas, NASCUS ensures members stay informed on developments that shape the state credit union system—supporting smarter decisions and a stronger, more agile state system. This resource is continuously being updated.
2026 Federal Legislation Reports
2025 Federal Legislation Reports
- Dec. 22 Federal Legislation Report
- Dec. 22 Detailed Legislation Status Report, Beyond Introduction
- Nov. 26 Federal Legislation Report
- Nov. 26 Detailed Legislation Status Report, Beyond Introduction
- Nov. 6 Federal Legislation Report
- Nov. 6 Detailed Legislation Status Report, Beyond Introduction
- Oct. 10 Federal Legislation Report
- Oct. 10 Detailed Legislation Status Report, Beyond Introduction
- Sept. 3 Federal Legislation Report
- Sept. 3 Detailed Legislation Status Report, Beyond Introduction
- Aug. 7 Federal Legislation Report
- Aug. 7 Detailed Legislation Status Report, Beyond Introduction
- July 10 Federal Legislation Report
- July 10 Detailed Legislation Status Report, Beyond Introduction
- June 12 Federal Legislation Report
- June 12 Detailed Legislation Status Report, Beyond Introduction
- May 13 Federal Legislation Report
- May 13 Detailed Legislation Status Report, Beyond Introduction
2026 State Legislation Reports
- Jan. 23 State Legislation Report
- Jan. 23 Detailed State Legislation Status Report Beyond Introduction
2025 State Legislation Reports
- Dec. 22 State Legislation Report
- Dec. 22 Detailed State Legislation Status Report Beyond Introduction
- Nov. 26 State Legislation Report
- Nov. 26 Detailed State Legislation Status Report, Beyond Introduction
- Nov. 6 State Legislation Report
- Nov. 6 Detailed State Legislation Status Report, Beyond Introduction
- Oct. 10 State Legislation Report
- Oct. 10 Detailed State Legislation Status Report, Beyond Introduction
- Sept. 3 State Legislation Report
- Sept. 3 Detailed State Legislation Status Report, Beyond Introduction
- Aug. 7 State Legislation Report
- Aug. 7 Detailed State Legislation Status Report, Beyond Introduction
- July 10 State Legislation Report
- July 10 Detailed State Legislation Status Report, Beyond Introduction
- June 12 Detailed State Legislation Status Report, Beyond Introduction
- May 13 State Legislation Report
- May 13 Detailed State Legislation Status Report, Beyond Introduction
NASCUS Legislative and Regulatory Affairs Department
September 2, 2025
Summary
On August 18, 2025, the Department of the Treasury (“Treasury”) issued a request for comment on the use of innovative or novel methods, techniques, or strategies to detect and mitigate illicit finance risks involving digital assets. The notice was issued as a requirement of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) and supports the Administration’s policy of supporting the responsible growth and use of digital assets outlined in Executive Order 14178. This request also aligns with the July 30, 2025 report from the Working Group on Digital Assets advocating enhanced AML/CFT measures through public-private collaboration.
Comments must be received on or before October 17, 2025.
Request for Comment
With this request for comment Treasury seeks to identify innovative methods that financial institutions currently use or could use to detect illicit activities, such as money laundering, involving digital assets. The GENIUS Act lists four specific technologies in which Treasury is seeking comment, which include:
- Application Program Interfaces (APIs): APIsserve as system access points or library functions that allow different software applications to communicate and interact, including those used for AML/CFT and sanctions compliance. APIs can be used to share data automatically and facilitate access to transaction information. Once deployed, they can also be used to help enforce strict access controls, monitor transactions, and enhance security for institutions handling digital assets.
- Artificial Intelligence (AI) Systems: AI, for purposes of this request, means a “machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments.” AI is used in financial institutions to help analyze significant amounts of data and more effectively identify illicit patterns, risks, trends, and typologies in money laundering.
- Digital identity verification mechanism: Digital identity verification, also known as “identity proofing,” involves confirming a person’s identity in a digital setting. Treasury is interested in portable digital credentials that can simplify compliance, protect user privacy, and reduce the burden on financial institutions.
- Blockchain monitoring tools: Blockchain technology and monitoring leverage the public ledgers of many digital assets, allowing observation and analysis of pseudonymous transactions that are on the blockchain’s public ledger. The U.S. government and financial institutions use blockchain analytics to trace illicit activity, evaluate risks, analyze cross-chain transactions, and detect patterns signaling potential illegal activities.
Treasury encourages commenters to help identify innovative or novel methods that regulated financial institutions can use to detect and mitigate illicit finance risks involving digital assets. For each method discussed when providing feedback, Treasury seeks comments on the following factors:
- Improvements in the ability of financial institutions to detect illicit activity involving digital assets;
- Costs to regulated financial institutions;
- The amount and sensitivity of information that is collected or reviewed;
- Privacy risk associated with the information that is collected or reviewed;
- Operational challenges and efficiency considerations;
- Cybersecurity risks; and
- Effectiveness of the methods, techniques, or strategies at mitigating illicit finance.
Questions for commenters include:
- What are the most significant illicit finance risks and vulnerabilities in the digital asset ecosystem, and what trends have financial institutions observed?
- What innovative API-related strategies are financial institutions using to detect illicit activity, and what are the associated risks, benefits, and challenges?
- How is AI being used to analyze transactional data and identify complex illicit financial networks? What are the key lessons learned, and what are the risks and benefits of using AI?
- What are financial institutions using for digital identity verification, including portable digital credentials, and what are the related risks, benefits, and challenges?
- How are financial institutions using blockchain monitoring tools to integrate on-chain and off-chain data? What are the challenges, such as obfuscation tools, that complicate tracing and attribution?
What other innovative technologies, such as cryptographic protocols, cloud-based solutions, oracles, or smart contract tools, are being used to combat illicit finance? What are their risks and benefits
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NCUA Financial Innovation: Loan Participations and Eligible Obligations Final Rule
Watch HereNCUA Summary: Decennial Notice of Regulatory Review and Request for Comment on “Agency Programs,” “Capital,” and “Consumer Protection”
NASCUS Legislative and Regulatory Affairs Department
July 15, 2025
On July 10, 2025, The NCUA Board (Board) approved a voluntary regulatory review and request for comment under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). EGRPRA requires the FFIEC and federal bank regulatory agencies to review their regulations every ten years to identify any outdated, unnecessary, or unduly burdensome regulations applicable to insured depository institutions. While this statute does not apply to the NCUA, the agency is voluntarily participating in the review process.
Over two years, the NCUA has indicated it will publish four Federal Register notices, each requesting comment on multiple categories or regulations. The first notice requested comments on regulations concerning “Applications and Reporting” and “Powers and Activities.”
This second notice requests comments on regulations concerning “Agency Programs,” “Capital,” and “Consumer Protection.” The NCUA will address the remaining five categories in the next two documents.
Comments on the voluntary regulatory review are due on or before October 8, 2025.
Summary
Due to the unique circumstances of federally insured credit unions and their members, the NCUA Board has once again issued a separate request from the other agencies, including issues unique to credit unions. In previous decennial reviews, the Board developed and published for comment ten categories of the NCUA’s regulations. The Board is following the previous reviews and is utilizing the same 10 categories in this multi-year review.
The NCUA is seeking comment on the following regulations, divided into three categories.
(You can find NASCUS comments on the first notice here.)
[kp_table table_title=”Category of Regulation: Agency Programs”]
| Subject | Regulatory Citation | Applicability to FISCUs |
|---|---|---|
| Community Development Revolving Loan Fund Access for Credit Unions | 12 CFR 705 | 741.207 |
| National Credit Union Administration Central Liquidity Facility | 12 CFR 725 | 741.210 |
| Designation of Low Income Status; Receipt of Secondary Capital accounts by low-income designated credit unions | 12 CFR 701.34 | 741.204 |
[/kp_table]
[kp_table table_title=”Category of Regulation: Capital”]
| Subject | Regulatory Citation | Applicability to FISCUs |
|---|---|---|
| Capital Adequacy | 12 CFR 702 | 741.226 |
| Adequacy of Reserves | 12 CFR 702 and 12 CFR 747 | 12 CFR 741.3(a) |
[/kp_table]
[kp_table table_title=”Category of Regulation: Consumer Protection”]
| Subject | Regulatory Citation | Applicability to FISCUs |
|---|---|---|
| Nondiscrimination requirements (Fair Housing) | 12 CFR 701.31 | |
| Truth in Savings | 12 CFR 707 | 741.217 |
| Loans In Areas Having Special Flood Hazards | 12 CFR 760 | 741.216 |
| Fair Credit Reporting; Duties of Users Consumer Report Regarding Address Discrepancies and Records Disposal. | 12 CFR 717 Subpart I | |
| Fair Credit Reporting; Identity Theft Red Flags | 12 CFR 717, Subpart J | |
| Share Insurance | 12 CFR 745 | 741.212 |
| Accuracy of Advertising and Notice of Insured Status | 12 CFR 740 | 741.211 |
| Disclosure of share insurance | 12 CFR 741.10 | |
| Notice of termination of excess insurance coverage | 12 CFR 741.5 | |
| Uninsured membership shares | 12 CFR 741.9 | |
| Member inspection of credit union books, records, and minutes. | 12 CFR 701.3 |
[/kp_table]
CFPB Summary re: Recission of State Official Notification Rules (Withdrawal)
12 CFR Part 1082
The Consumer Financial Protection Bureau (CFPB) is withdrawing a previously published direct final rule that would have rescinded procedures by which a State official must notify the Bureau when the official takes an action to enforce the Consumer Financial Protection Act.
The withdrawal of the rule was effective as of July 21, 2025 and can be found here.
Summary
The Bureau issued a final rule on May 21, 2025 that would have rescinded procedures that required State officials to notify the Bureau when the official takes an action to enforce the Consumer Financial Protection Act. The Bureau noted that the May 2025 rule would be withdrawn if the Bureau received significant adverse comments by June 20,2025. According to the rule withdrawal summary, the Bureau received significant adverse comments and is withdrawing the rule as a result.
The Bureau will address comments received in a subsequent rulemaking.