Sherman added if the law passed, small business owners would not even be aware and would have difficulty meeting the compliance requirements. He asked for an amendment or to at least work with Neugebauer to add an exemption for small businesses.

Rep. Ed Royce (R-Calif.) said credit unions in California have been hit hard by breaches.

"The Target breach cost the Credit Union of Southern California $35,000," Royce said. "The Home Depot breach cost SchoolsFirst Federal Credit Union $700,000, with a 65% increase in card fraud. And CoastHills Credit Union watched $71,000 in fraud, on seven cards, hit their system in the first four minutes of that breach. And that's all the same breach, so you get a sense of how that fans out among all of these issuers."

He added that he raised the issue not to point fingers, but to emphasize that the committee can do better.

"We must incentivize companies to put in place comprehensive security protections that work," Royce said. "If they fail to do that, they should pay the price of the breach."

In a Dec. 9 press release, Neugebauer stated, "Each day, the United States' economy is the target of over 100,000 cyber incidents. The status quo is failing and leaving the American people vulnerable to further data breaches."

The NCUA Budget Transparency Act was introduced by Rep. Mick Mulvaney (R-S.C.) and passed in a 40-16 vote. The NCUA's budget has long been a rallying cry from credit unions and trade groups.

Industry trade groups applauded the House Financial Services Committee for voting the two bills out of the committee. Lucy Ito, president/CEO of NASCUS, said in a release that the legislation "represents not just sound public policy, but can help to ensure an equitable playing field for state and federally chartered credit unions."

NAFCU President/CEO Dan Berger thanked the committee and Chairman Jeb Hensarling (R-Texas) in a statement.

"We look forward to continuing our work with Congress to keep these two vital pieces of legislation on track to final passage," Berger said.

Additionally, CUNA President/CEO Jim Nussle said in a statement that the legislation has long been a top priority for CUNA since the Target data breach of 2013.

"The House Financial Services Committee voted today to protect consumers by strengthening our country's data security laws," Nussle said. "The CUNA-backed Data Security Act will prevent breaches by providing a higher standard for all who accept payments, better notification procedures and a federal law that will replace the cumbersome patchwork of state laws. Until retailers adhere to the same standards that financial institutions are beholden to, millions of consumers will remain at risk."

Financial Services Roundtable President/CEO Tom Pawlenty also praised the bill's advancement, adding, "Protecting customers' data from cyberhackers is critical and we applaud the committee, as well as Reps. Neugebauer and Carney, for leading this important issue. American consumers should not have to continue suffering because their personal and financial data is exposed due to data breaches at well-known merchants."