NAFCU’s response to NCUA testimony on small depository institutions

WASHINGTON (September 16, 2014) —National Association of Federal Credit Unions (NAFCU) Senior Vice President of Government Affairs and General Counsel Carrie Hunt countered several points in testimony by the National Credit Union Administration (NCUA) for today’s Senate Banking Committee hearing, “Examining the State of Small Depository Institutions.”

Decline of small credit unions
Hunt challenged the agency’s explanation for the decline of small credit unions. “The extraordinarily challenging regulatory environment has played a significant part in the decline of small credit unions and continues to exacerbate the demands on small credit unions. We have lost 1,025 federally-insured credit unions since the second quarter of 2010, following implementation of Dodd-Frank Wall Street Reform and Consumer Protection Act and the creation of the Consumer Financial Protection Bureau.”

Risk-based capital proposal
Regarding risk-based capital, Hunt challenged the agency’s statement that only credit unions with $50 million or more in assets would be impacted by this proposal. “In its current form, this industrywide proposal would stifle growth, innovation and diversification. Credit unions with more than $50 million in assets will have to carefully examine their balance sheets and potentially make substantial portfolio changes based on the proposed rule. This would require credit unions to hold $7.1 billion more in additional capital reserves to achieve the same currently maintained capital cushion.”

Bid for third-party vendor examination authority
In terms of third-party vendor authority, Hunt stated, “NCUA’s assertion that small credit unions will be afforded regulatory relief if NCUA is granted authority to examine third-party vendors is highly questionable. NCUA already has existing authority to regulate credit unions and their third-party relationships. Yet it is again relying on an anomaly to justify an expensive regulatory regime that will not result in a safer or more sound system.”

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The National Association of Federal Credit Unions is the only national trade association that exclusively represents the interests of federally chartered credit unions before the federal government and the public.

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