Housing provision emerges as key in defense spending bill

• Key insight: Bank-specific items in the National Defense Authorization Act include a housing package, credit union liquidity and Community Development Financial Institution Fund provisions. 
• Forward look: Negotiations on those and other provisions are still ongoing and fluid after the White House weighed in in favor of the housing bill. 
• What’s at stake: Mortgage bankers say the housing package would help depository institutions reenter and gain market share in the mortgage origination market. 

WASHINGTON — The defense spending bill has long been one of the few must-pass pieces of legislation for Congress, and thus a predictable target for lawmakers and their allies to tack on policy riders that might not otherwise get a vote. 

But while banking provisions occasionally make their way into the conversation, this year’s National Defense Authorization Act is more bank-heavy than usual. Several items of interest to bankers are still on the table, including a liquidity facility for credit unions, a major housing package that already passed unanimously through the Senate Banking Committee and efforts to shore up the Community Development Financial Institutions Fund. 

Tumult has already erupted in the House over some of these provisions, as earlier reported by Politico. House Financial Services Committee Chairman French Hill, R-Ark., rejected a proposal that would have included large parts of the Senate’s bipartisan housing agreement, saying that it must have buy-in from his committee before it gets a vote on the floor. Hill also blocked a provision that would have expanded the CDFI Bond Guarantee Program, three people familiar with the negotiations confirmed. 

Talks on the issue, however, remain fluid. The White House has thrown its weight on the housing package, the people said, which is backed in the Senate by the banking committee’s chair and ranking member, Sens. Tim Scott, R-S.C., and Elizabeth Warren, D-Mass. 

“Everything is at a logjam,” said Jason Stverak, chief advocacy officer at the Defense Credit Union Council. 

The housing package — which the banking industry generally supports — would make relatively modest adjustments to several existing programs, including expanding the ability of the Federal Housing Authority to finance loans for manufactured homes. 

“This really does leverage a lot of programs, and if you can get to a point of consensus between the House and the Senate to get something to the White House, it really could have the potential impact of helping to encourage greater interest on the part of depositories to participate in the mortgage marketplace,” said Bill Killmer, the Mortgage Bankers Association’s chief lobbyist. 

But as a practical matter, the NDAA bill is its best and possibly only chance of becoming law in the current Congress. Input from the House Financial Services Committee would likely take more time than exists before lawmakers leave for Christmas, and lawmakers will likely be in campaign mode for much of 2026. 

“It is not clear that the bipartisan support for this package will survive beyond the NDAA,” said Cowen analyst Jaret Seiberg in a note. “Democrats could see an opportunity to leverage their support to enact unrelated policies that Republicans oppose. And Republicans may feel pressure to advocate for measures that go beyond what Democrats will accept, including those dealing with environmental reviews.” 

Another unresolved issue in the negotiations is the inclusion of legislation that advocates argue would make it easier for small credit unions to access the credit union Central Liquidity Facility. 

“If we have another Silicon Valley Bank situation, the small credit unions don’t have a ready-made backup,” Stverak said. 

But although the credit union liquidity facility isn’t a point of contention at the moment, it’s not clear what the final form of the banking part of the NDAA will be once the housing piece is settled. 

“You build a fire station when there’s not anything already on fire,” Stverak said. “This is our opportunity to do that.”