The US House of Representatives earlier today passed President Trump’s tax and spending bill that he refers to as the “Big Beautiful Bill.”  The bill passed on a vote of 215 to 214 and now goes to the US Senate.  Senate action is likely to take place over the next six weeks with a goal to have the bill to the President’s desk by July 4.

With the bill having cleared the House with no serious effort to include credit union taxation by House members in any of the eleven committees that had some jurisdiction over parts of the bill, the odds continue to increase that the final bill will be free of credit union taxation.

Yes, as long as the bill is not yet final, there is always the possibility that additional sections could be added to the tax code – such as credit union taxation.  But, with one house of Congress having already acted without including any credit union taxation provision, it becomes less and less likely that such a major provision will be added in the Senate or in a conference committee between the two houses of Congress to iron out any differences.

As we have stated from the beginning, if Congress begins taxing not-for-profit entities where does it stop?

It would be hard to make the case to tax not-for-profit financial cooperatives like credit unions that might bring in $2 billion annually to the US Treasury without also taxing not-for-profit hospitals that would bring in $28 billion each year or rural electric cooperatives that would bring in $27 billion a year.

Why stop there?  How about taxing private colleges and universities?  Associations?  Churches?

Congress does not seem to have the appetite to go there.

Does that mean the advocacy efforts of “Don’t Tax My Credit Union” have been for naught?  Absolutely not.  Congressmen and senators have long memories.  When one of them gets 18,000 emails against taxing credit unions, that sticks in their memory bank for the next two, four, six or eight years.

This advocacy effort, although the likelihood of credit union taxation was probably never above the 30-70 odds against it that we predicted, can pay political dividends for several years to come.

There is some benefit in the full court press that credit unions and their trade associations at the national and state levels have put forward in Congress.  However, although credit unions do not need to let their guard down until the final bill is signed into law and there is no credit union taxation included, the odds of credit union taxation – now that the House of Representatives where tax bills must constitutionally originate has passed a bill clean of any reference to taxing credit unions – are likely 20-80 now.  Maybe even less.

What About Consolidation of Regulators?

There has been some concern expressed that NCUA might could get consolidated into either the Federal Deposit Insurance Corporation (FDIC) or, more likely, the US Department of the Treasury.

This concern reasonably would be quite significant in that such a consolidation would remove the independence of NCUA to regulate and insure credit unions and credit unions only.  Essentially, consolidation of NCUA into either the FDIC or the Treasury Department would put the banking industry – which has great influence in both agencies – in charge of credit union regulation.

Over time, the results of consolidation would bring about the regulatory hamstringing of credit unions into a bank-preferred model for field of membership restrictions, business lending limits, merger stumbling blocks, eliminating bank purchases, implementing CRA and a restricted access to the capital markets.

The good news is that Treasury Secretary Scott Bessent has publicly stated that he does not support consolidation of the federal regulatory agencies.  Unless President Trump intervenes as is unlikely and demands that Congress consolidate these agencies, the Treasury Secretary’s position is likely to prevail in Congress and no consolidation be approved.

Secondly, consolidating a federal regulatory agency will have to be passed by Congress in a separate piece of legislation.  It could not be included in the “Big Beautiful Bill” because it is required by congressional rules for the budget reconciliation process that revenue and spending bills must not include general legislation – such as a provision to consolidate existing federal agencies.

Since NCUA receives no taxpayer dollars and is funded solely by credit unions, there is no impact to federal taxation or spending involved.  Therefore, consolidating NCUA could not be included in the “Big Beautiful Bill” and it is not.

Because such a consolidation will require a separate bill with a separate vote in each chamber, this will be a much tougher climb for such a piece of legislation to be approved by Congress.

Whereas we earlier predicted that the NCUA consolidation odds were 50-50 in the DOGE government spending days earlier in the Trump administration, we would place the odds much less – probably around 30-70 – of agency consolidation in the months to come if it has not gotten any traction to date when DOGE was getting all the headlines.

What Else is in the “Big Beautiful Bill” that Credit Unions Should Be Interested In?

In addition to making permanent the 2017 Trump Tax Cuts from the Tax Cuts and Jobs Act, the “Big Beautiful Bill” will impact those credit unions with financial planning services in that it makes permanent a $15 million estate tax exemption per individual taxpayer – $30 million for a couple filing jointly.  Making the estate tax exemption permanent at this higher level will provide some clarity for credit union members and CUSO customers who turn to their credit union for estate planning guidance.

The bill also provides $100 million to the Office of Management and Budget (OMB) for a broad initiative emphasizing de-regulation – particularly at the Consumer Financial Protection Bureau (CFPB).  This initiative at OMB will result in a much smaller and less activist CFPB, at least for the remainder of the current administration.

Whereas the CFPB has been the most active regulator for credit unions under the Biden administration, it is obvious that the CFPB is going to be a leaner and more focused agency going forward.  Almost 70 guidance documents the CFPB issued over the past four years have been pulled back, as well as a notable number of proposed regulations.

The CFPB overdraft rule has been rescinded by Congress itself.  The open banking proposal has been pulled back.  The collections, remission, consumer credit reporting, arbitration and business lending reporting rules have all been withdrawn from enforcement until further review.

It is reported that the Trump Justice Department is leaning toward not defending the CFPB’s credit card late fee rule that has been challenged in court by a coalition of banks, credit unions and card companies.

So, the CFPB is going to be a much kinder, gentler agency for the next almost four years.  After the flurry of activism during the Rohit Chopra years at CFPB under the Biden administration, most credit unions – particularly those with over $10 billion in assets and therefore under CFPB direct supervision – will be able to breathe a little better with the current approach that is coming from the CFPB.

A couple of other provisions that might be of interest to credit unions are the repeal of clean energy tax credit transferability which could impact those credit unions or CUSOs offering solar lending, the streamlining of natural gas project permitting which could help fuel more projects that might need commercial loans in those states that have high natural gas production and an increase in the deducibility from $10,000 to $40,000 of state and local income taxes from federal taxation which could help drive deposits around tax refund time for credit unions in higher tax states.

Other than that, most of the other provisions of the “Big Beautiful Bill” have been covered in the mainstream press sufficiently that I don’t need to touch on them here.

Now it is time to watch what happens in the Senate.  We will continue to monitor that for you and report in future Client Updates.

What Happened at NCUA’s One-Member Board Meeting Today?

 First of all, a board meeting happened with NCUA Chairman Kyle Hauptman as the sole board member.  This is the first time this has occurred since 2002 when I presided at a meeting of the NCUA Board as the single board member.

(Incidentally, the two-month period I served as the NCUA Board myself as the only sitting NCUA Board Member while serving as NCUA Chairman is a period we here at Dollar Associates call the Golden Age of Credit Union Regulation.)

Seriously, Chairman Hauptman is to be commended for holding the board meeting.  He cancelled last month’s board meeting immediately following President Trump’s dismissal of Board Members Todd Harper and Tanya Otsuka.

While Mr. Harper and Ms. Otsuka have challenged their terminations in court and the validity of their dismissals will be determined over the months ahead through the judicial process, Chairman  Hauptman is correct to establish – in keeping with the precedent we set in 2002 – that a federal regulatory agency like NCUA cannot be effectively shut down because of board member vacancies.

A federal safety and soundness regulator cannot put a halt on all of its essential activities because its board is down to a single member.  Congress created NCUA to regulate and insure credit unions for the good of their depositors and the American public.

I give kudos to Chairman Hauptman for leading the agency until there is a full three-member board complement in place, including holding board meetings, taking administrative actions, hearing appeals, overseeing personnel decisions, serving as the spokesperson for the agency – and even enacting or postponing regulations where appropriate.

I think Congress would expect the same thing from the FDIC, FTC, Federal Reserve or any other federal agency created for a specific purpose by Congress, just like NCUA, to fulfill that congressionally mandated purpose if their boards or commissions were down to a single member.

The appropriate and necessary role of governmental regulatory agencies does not stop, nor should it, because there are board vacancies regardless of the reason for the vacancies.

Two things of significance happened at the board meeting today.

First, Chairman Hauptman announced that the NCUA’s Voluntary Separation Program, in compliance with President Trumps; Executive Order #14210, has been implemented and that approximately 250 NCUA employees have taken the voluntary separation buyout and will officially separate from NCUA before December 31, 2025.

This will reduce the number of NCUA employees from the 1255 authorized in the 2025 agency budget to approximately 953 as of the end of the year.

As the number of credit unions being regulated and/or insured by NCUA is now below 4600 when it was once as high as 24,000, such a reduction in the size of NCUA staff is long overdue.

Without having to terminate anyone, the NCUA’s voluntary separation program – even after paying out the $50,000 separation incentive to around 250 staff members – will save the agency and the credit unions who support it approximately $75 million per year.

While there may be some key people with years of experience and expertise that are no longer with the agency after the end of this year, the net benefit to the agency and to credit unions is that some budget discipline has finally been restored to NCUA.

When I left NCUA in 2004 after my tenure as NCUA Chairman, there were 12,500 credit unions and the agency had 1030 employees.  In the twenty years since I left the agency, the number of credit unions has gone down to almost 4500 but there were almost 1300 employees.

There are some great public servants at NCUA, and I value their hard work and dedication.  But there was also a mentality of “solve every issue by hiring more people” that had resulted in a great deal of bloat and even inefficiency.

This has been a healthy exercise for NCUA even though some excellent, long term agency staff will be lost.  Transitions come.  No one is irreplaceable.  NCUA will do fine.  I have confidence that the agency leadership will step up and meet the challenge of become more efficient with fewer staff.

One additional announcement came from the meeting today.

Chairman Hauptman announced that he wanted to see the next strategic plan of the agency to focus on “rethinking” and to “reimagine” NCUA for the future and to make it a more forward-looking agency.

He encouraged credit unions to provide feedback to the agency as the board and the staff looks forward to NCUA’s 2026-2030 strategic plan.   It is a great opportunity to have your views heard at a time when NCUA is indeed having to look at itself closely to become a more efficient and, hopefully, effective federal financial regulatory agency.

Assuming the agency does not get consolidated as we discussed earlier, hearing from credit unions on where NCUA should move and how it should operate over the next five years can be a valuable exercise.

Credit unions can submit any feedback, suggestions or viewpoints on the NCUA 2026-2030 Strategic Plan by emailing [email protected].

Have a great Memorial Day weekend.

Until next time,

Dennis Dollar