by: Henry Meier
As expected, at yesterday’s board meeting the NCUA proposed raising the cap below which a credit union is considered a small credit union for regulatory relief purposes from $50 to $100 million. According to NCUA, the increase means that an additional 745 credit unions will be eligible for potential relief from future regulations for a total of approximately 4,869.
Great job by the agency in coming forward with the proposal; but we won’t really know how much this helps the industry for some time to come. First, the agency has already exempted credit unions below the threshold from onerous mandates including those dealing with enhanced protections against interest rate risk and the proposed enhanced Risk-Based Capital framework. Second, many of the biggest mandates are out of NCUA’s hands. For example,the CFPB has been willing to extend mandate relief to institutions with as much as $2 billion dollars in assets, but these exemptions come with strings attached – such as a requirement that exempted institutions hold most of their mortgages. Thirdly, the fact that NCUA justifiably feels the need to dramatically raise the small credit union designation after having raised it from $10 million approximately two years ago shows you how quickly the industry is changing and not for the better. NCUA examined rates of deposit growth, rates of membership growth, rates of loan origination growth, and the ratio of operating costs to assets and determined that credit unions below $100 million are at a “competitive disadvantage” to their peers.
The branch is dead! Long live the branch!
I actually found myself muttering in disagreement as I read a report issued by the FDIC yesterday. It concluded, based on an analysis of bank branching patterns from as far back as 1935, that:continue reading »