December 22, 2025
With a board of one and 16% of leadership roles filled by “acting” executives, credit union leaders could be forgiven for thinking the NCUA was already operating with limited capacity. Forgiven? Yes. Correct? No.
As announced in December, the regulator’s skeleton crew is undertaking a vast review of its policies, looking ostensibly to revise or remove requirements considered obsolete, duplicative, or overly burdensome.
While the headlines promise reduced burden (the review was initiated by a Trump Executive Order, after all) the nuances of the first two sets of proposals suggest a transfer of responsibility that, in the long-term, could see credit union executives making decisions in the grey.
How Guidance Over Regulation Could Lead to More Whiplash
A central tenet to the Deregulation Project is the migration of detailed supervisory expectations out of the Code of Federal Regulations (CFR) and into nonbinding guidance.
Again, on the face of it, it’s accomplishing what it sets out to do: Less burdensome regulation. In reality, however, there’s inherent risk. Take the proposal to remove Appendix A (Guidelines for Safeguarding Member Information) and Appendix B (Response Programs for Unauthorized Access) from CFR 748. Those responsible for information security and risk should think long and hard about the implications here.
The NCUA’s argument is that having these guidelines in the CFR causes confusion; implying they are independent requirements rather than tools to support compliance.
However, while these appendices would no longer be codified regulations, the statutory obligation to protect member data remains absolute—and rightly so. And by shifting this to “guidance” rather than “regulation”, the agency has the agility to update expectations faster than the rulemaking process would allow. Credit unions, then, could see more frequent updates to cybersecurity expectations, not fewer, requiring rapid adjustments to their controls rather than static compliance checklists.
Every silver lining has its cloud.
Implications on Lending
It’s a similar story when we take a closer look at lending implications. Under proposals available for comment through February, the NCUA would remove the regulatory requirement that a federally insured credit union board approve all loans to other credit unions and adopt written policies setting internal limits for those loans.
Again, the argument is that the FCU Act already requires board approval, so the additional step of written policies is “unnecessary and overly prescriptive.” Inter-credit union lending is an effective liquidity management tool and here, credit union executives are (again) told what good looks like, but not necessarily how they should achieve it. It frees up mental capacity and could stimulate innovation, but there’s inherent risk in subjectivity.
A Boon for Balance Sheets
One proposal could end up having some seismic balance sheet repercussions, particularly as credit unions gear up for the realities of instant payments.
The agency has mooted relaxing the long-standing requirement that credit unions lock up segregated deposits or post specific collateral every time they issue a suretyship or guaranty. These requirements are notorious for creating liquidity friction; tying up funds on the sidelines to satisfy legislation that is often more to do with paperwork than legitimate risk.
Once again, the NCUA’s position here is one of trusting the adults in the room; that rigid, one-size-fits-all structures don’t necessarily benefit a modern, fluid, financial ecosystem—particularly one with as much institutional diversity as the credit union system.
Look to Trusted Partners
So far, the thread tying all deregulation proposals together is one of transferred responsibility. There are untouchable, immovable concepts (financial prudence, consumer safety etc.) but the mechanics of how a credit union delivers against those may be dictated locally.
If these proposals move forward, the hiring, training, and operational diligence of senior credit union staff will never have been more critical.
Similarly, are the partners credit unions choose to work with to manage their balance sheets. Perhaps never in the history of fintech has experience and scale counted for so much.
If you’d like to tap into LendKey’s decades of liquidity management and loan participation experience, reach out.