NCUA easing small credit union burdens

Fazio Testifies on Agency’s Efforts to Provide Regulatory Relief, Streamline Examinations and Offer Assistance

ALEXANDRIA, VA (September 16, 2014) — The challenges faced by small credit unions require the National Credit Union Administration to continually examine options for providing regulatory relief, the agency told members of the Senate Banking Committee today.

Larry Fazio, NCUA’s Director of the Office of Examination and Insurance, testified at the Committee’s hearing, “Examining the State of Small Depository Institutions.” The testimony is available online here.

“With one-third of credit unions having less than $10 million in assets and two-thirds of credit unions having less than $50 million in assets, NCUA is acutely aware of the importance of scaling its regulatory, supervisory, and assistance programs to address the unique circumstances of small credit unions,” Fazio said.

“The agency has also made significant progress in considering the concerns of small credit unions during the last five years. Where the rules that affect small credit unions are within the agency’s control, and where regulatory exemptions and tailored rules would not significantly affect safety and soundness, NCUA has taken proactive action to ease those burdens.”

NCUA strives to ensure that rulemaking is reasonable and cost-effective, and the agency has taken several steps to provide relief for small credit unions, including, in January 2013, updating the definition of “small entity” from the previous ceiling of less than $10 million assets to less than $50 million in assets. That rule nearly doubled the number of small credit unions.

NCUA subsequently provided regulatory relief to small credit unions in several ways, including:

  • Exempting small credit unions from risk-based net worth requirements and the associated prompt corrective action mandates.
  • Excluding small credit unions from the requirements of the interest-rate risk rule.
  • Scaling new liquidity rules so small credit unions are required to have a written liquidity management policy, rather than a formal plan or requiring access to a contingent federal source of liquidity.
  • Streamlining the examination program for smaller credit unions that are financially and operationally sound.

In addition to providing regulatory and supervisory relief, Fazio said, NCUA makes several assistance programs available through its Office of Small Credit Union Initiatives. The office provides one-on-one consulting in strategic management and operations, loans and grants, targeted training and partnership and outreach.

Fazio said Congress has several legislative tools that can help NCUA and small credit unions improve service to credit union members, including providing greater flexibility in writing rules to implement new laws, amending the Federal Credit Union Act to give the agency authority to streamline field-of-membership changes and better reach underserved communities and modifying the current cap on member business lending.

“NCUA recognizes the need to address the particular circumstances of small credit unions,” Fazio said. “We do this by tailoring our rules and by calibrating examinations based on an institution’s size, scope and risk. We provide direct assistance to small credit unions to help them develop strategic plans and provide needed services to their customers.”

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 98 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At andPocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.


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