Mon, Mar 2, 2015
The NCUA Board approved a proposed rule (Part 791) and policy statement to update the definition of a “small entity” under the Regulatory Flexibility Act to include federally insured credit unions with assets of up to $100 million.
“Small credit unions are essential to their communities, but many are struggling,” NCUA Board Chairman Debbie Matz said. “Few economies of scale, tight interest margins, outdated technology and new competitors are among the market forces our Office of Small Credit Union Initiatives works to help them overcome. To further help small credit unions compete, the NCUA Board has already taken several steps to alleviate regulatory burdens, including scaling our rules for interest rate risk, liquidity and risk-based capital and revising our examination process.
“We can, however, do more,” Matz said. “This proposal begins a process to provide more regulatory relief for more credit unions so that they can focus on serving their members, not on complying with regulations designed for larger credit unions that pose greater risk to the Share Insurance Fund.”
Under the proposal, 745 more credit unions would receive special consideration for reduced regulatory compliance requirements or exemptions in future NCUA rulemakings. The higher asset threshold commits the Board to specifically review the economic impact on small credit unions during future rulemakings. The Regulatory Flexibility Act generally requires federal agencies to determine and consider the effect of proposed and final rules on small entities.
Under the proposed definition for a “small entity,” approximately 4,869 federally insured credit unions would receive special consideration for regulatory relief. In all, the proposal would cover 77 percent of federally insured credit unions with 11 percent of the system’s assets.
In proposing the $100 million asset ceiling, the NCUA Board analyzed a broad range of metrics, including: deposit, asset and membership growth rates; the ratio of operating costs to assets; merger and liquidation trends; and operating expenses. In addition to providing potential regulatory relief, the proposal would make more federally insured credit unions eligible for assistance from NCUA’s Office of Small Credit Union Initiatives, at no cost.
Comments on the proposed rule, available online here, must be received within 60 days of publication in the Federal Register.