Board Meeting Digest — January 2026
The Deregulation Backdrop
Chairman Hauptman opened with an update on the deregulation project announced in December, which he likened to a spring cleaning — a periodic review of the rulebook that he argued government agencies need precisely because they lack the market discipline that forces it on private firms. Since the December announcement, the agency has published 12 notices of proposed rulemaking in the Federal Register, with more promised. The stated aim is to strip out requirements that consume credit union staff time without advancing safety and soundness, in line with the administration's deregulation executive order.
The agency also published its supervisory priorities for the year, reiterating a risk-based examination posture in which exam scope is tailored to each credit union's risk profile rather than applied uniformly. A public webinar on those priorities is scheduled for February 19. Both items reinforce the same message that ran through the two formal agenda items: 2026 is being positioned as a cost-reduction year for the system.
Dependent Care Reimbursement (Proposed Rule, Part 701)
Kesha Brooks, an attorney adviser in the Office of General Counsel, presented a proposed rule that would let federal credit unions adopt written policies to reimburse volunteer officials for dependent care costs incurred while conducting official credit union business. The Federal Credit Union Act caps compensation for board members but permits reimbursement of reasonable expenses; since the early 1990s, dependent care has been excluded from that definition. As staff noted, that exclusion was an interpretive choice, not a statutory requirement — which is why it can be revised by rule rather than by Congress.
The mechanics are deliberately narrow and permissive. The rule borrows the Internal Revenue Code's definition of a qualifying individual — generally a child under 13, a disabled dependent incapable of self-care, or a disabled spouse sharing the residence. Reimbursement would be optional: boards may adopt a policy, set limits, or decline entirely, and the existing safety-and-soundness guardrails carry over, including the agency's ability to object to policies it considers unsafe or unsound. The rule reaches only federal credit unions, including corporate FCUs; it does not touch the roughly 1,500 federally insured, state-chartered credit unions, and it changes nothing about federal or state tax treatment of the reimbursements.
The practical case rests on the volunteer model that distinguishes credit unions from banks. Roughly 20,000 people serve on federal credit union boards without compensation, and federal credit unions are required to meet 12 times a year — far more often than a typical corporate or nonprofit board. Chairman Hauptman tied the proposal to rising care costs, citing Department of Labor figures of up to $16,000 a year for full-time daycare and $6,000 to $9,000 for part-time care per child, and to the "sandwich generation" caring for children and aging parents at once. He credited Representative Brad Sherman of California with pressing the issue. The comment period runs through the standard Federal Register process.
The Central Liquidity Facility Budget (2026–2027)
Matt Boris, the CLF's acting president, presented the facility's two-year budget alongside CLF accountant King Yan. (Presenter names are drawn from the meeting's automated transcript and should be verified against the official record.) The headline: a 2026 budget of $2.0 million, a 12% reduction from 2025, followed by $2.1 million in 2027. The cut comes mostly from eliminating one position — authorized staffing holds at five — with further reductions in rent and overhead (down 27%), administrative costs (down 40%), and contracted services, travel, and training (down 18%).
The facility is growing into a larger backstop even as its budget shrinks. As of September 30, 2025, the CLF had 450 regular members plus 11 corporate correspondents — 14 net new regular members year-over-year — covering roughly 10% of all credit unions. Subscribed capital stock and surplus of $1.2 billion give the facility just under $22 billion in statutory borrowing authority, up $200 million from a year earlier, against more than $1 billion in total assets. Year-to-date investment income was $30.4 million; the facility paid a third-quarter dividend of 3.65% and retained earnings stood at $48.2 million, projected to reach $51.5 million by the end of 2026. The budget assumes investment income falls from a projected $40.1 million in 2025 to $35.6 million in 2026, tracking expected declines in short-term rates — which also pulls projected member dividends down from $34.6 million to $30.6 million.
Two recent advances illustrated the facility's role. A credit union in the $10 million to $50 million range took a 90-day advance after partially drawing its corporate line, choosing to preserve the remainder against other anticipated needs. A larger credit union in the $100 million to $500 million range took a 30-day advance to bridge maturing non-member deposit CDs; with its credit card portfolio pledged as collateral, several alternative funding routes were closed, making the CLF the relevant option. Chairman Hauptman returned to a framing he has used before — that the CLF is "insurance that pays you," with no application fee and a yield comparable to the short-term Treasuries a credit union would otherwise hold — and pressed staff on outreach, particularly to credit unions approaching the $250 million asset level, and on the application and website simplifications already underway.
FINASENSE Assessment
The timing of the CLF discussion is worth noting against the quarter's data. Q1 2026 was a quarter of abundant liquidity, not scarce — system shares grew 2.7% while loans grew just 0.5%, and credit unions paid down borrowings 14% year-over-year (see the Q1 2026 Ledger). Contingent liquidity is least urgent precisely when deposits are flooding in, which is exactly why building the membership now, ahead of need, is the defensible posture: a facility joined during a liquidity crisis is not a backstop, it is a scramble. The advances staff described — both involving credit unions preserving corporate-line capacity and working around pledged collateral — are the routine, pre-positioned use the facility is designed for, not distress.
The deregulation theme connects more directly to the system's real pressure point. The agency's 2026 message is lower cost, and the dependent-care rule and the leaner CLF budget are concrete instances of it. But the structural squeeze on the smallest credit unions is one that lighter regulation can soften only at the margin. As the Q1 cohort analysis shows, credit unions under $100 million earned an annualized 0.13% on assets despite strong margins and clean credit — their constraint is scale, not compliance. Removing regulatory friction helps, and a rule that makes volunteer board service more accessible to single parents and caregivers is a genuine, if modest, support for the small-CU governance model. Neither changes the arithmetic that is driving consolidation. The agency is easing the cost of staying small; the economics still reward getting larger.