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Treasury Secretary Steven Mnuchin showed support during a Senate Banking Committee hearing Thursday for the idea of pulling credit unions and community banks with less than $10 billion in assets out from the regulatory requirements of the Dodd-Frank Act.

Mnuchin was testifying before the committee on domestic and international policy. He offered his support for exempting credit unions with assets of less than $10 billion from Dodd-Frank Act requirements in response to a question from Sen. John Kennedy, R-La. Mnuchin added that this idea is likely to be one of Treasury's recommendations in its upcoming report on financial reform, which he indicated should be released in the next few weeks.

President Donald Trump tasked Mnuchin with reviewing aspects of financial regulation, including the Dodd-Frank Act. Mnuchin previously indicated that Treasury is likely to release several reports as part of this process, the first of which is expected to be on financial reform for community financial institutions.

Late last month, NAFCU President and CEO Dan Berger sent Mnuchin a "framework" for how the current administration could create meaningful regulatory relief for credit unions.

"We appreciate that Secretary Mnuchin recognizes the heavy regulatory burden faced by smaller credit unions," said NAFCU Vice President of Legislative Affairs Brad Thaler. "However, we think this should be taken a step further and all credit unions should be exempt from the requirements of the Dodd-Frank Act. The credit union industry did not participate in the activities that led to the creation of Dodd-Frank and are already under their own regulatory framework."

Committee Chairman Mike Crapo, R-Idaho, in his opening statement, noted the regulatory burden faced by the nation's smaller financial institutions and said the banking industry should be "well-capitalized and well-regulated, without being drowned by unnecessary compliance costs."

He continued by highlighting the significant costs of the current regulatory compliance burden. "[C]ommunity banks and credit unions lack the personnel and infrastructure to handle the overwhelming regulatory burden of the past few years, yet in many ways are treated the same as the world's biggest institutions." He also encouraged Mnuchin to avoid a "one-size fits all approach" when it comes to new regulations.

Mnuchin also faced questions Thursday regarding Trump's tax reform principles that were released last month. The principles emphasize the importance of simplifying the tax code, creating jobs and providing tax relief for middle-income families. NAFCU staff will monitor the administration's progress in developing the plan and will remain vigilant in protecting the credit union tax exemption.

Also during Thursday's hearing, Sen. Bob Menendez, D-N.J., made a vocal defense of community development financial institutions.