WASHINGTON (2/11/15)--The National Credit Union Administration will consider raising the Regulatory Flexibility Act definition of small credit union to an asset threshold of $100 million or less at its next board meeting, the agency testified before the U.S. Senate Banking Committee Tuesday.
In a full committee hearing dedicated to examining regulatory relief, NCUA Director of Examination and Insurance Larry Fazio told the committee that a proposal on the agency's Feb. 19 meeting agenda, if approved, would change the definition.
"Increasing the threshold from $50 million to $100 million would provide special consideration for regulatory relief for an additional 745 credit unions in future rulemakings," Fazio said. "Should the board adopt a $100 million threshold, 77% of all credit unions would be covered in future considerations of regulatory relief."
CUNA strongly supports raising the threshold which could make more credit unions eligible for regulatory relief under some of NCUA's requirements. The Federal Reserve considers a bank to be a small community bank if its assets are under $10 billion.
In his written and oral testimony to the committee, Fazio highlighted a number of regulatory relief measures and noted that "a lot of the rules credit unions complain about aren't under the NCUA's direct authority. There's not much we can do, but we try where we can to help them."
CUNA will testify before the same committee Thursday, on the same topic of regulatory relief. CUNA's testimony will include more than two dozen recommendations for statutory changes and also will identify parts of the Federal Credit Union Act that need to be updated.
During the Tuesday hearing, most of the committee agreed that while credit unions and community banks did not contribute to the financial crisis, they are being affected by the regulations put in place because of it.
"Our community banks and credit unions play a unique and critical role in the market for financial services, and we must ensure that they can continue to do that in the years ahead," said Sen. Elizabeth Warren (D-Mass.). "These small institutions clearly do not pose the same kinds of risks as the biggest banks, and our regulation and supervision of these institutions should reflect that."
Warren pointed to the Dodd-Frank Act as legislation that does reflect the differences. However, committee Chair Sen. Richard Shelby (R-Ala.) cited a 2012 study that found 74% of the 192 rulemakings under Dodd-Frank regulations did not contain a cost-benefit analysis.
"That means we had no idea how much nearly three-fourths of Dodd-Frank rules cost to comply with," Shelby said.
Fazio said the NCUA takes costs and benefits "we can reasonably catalog" into the agency's rulemaking process, and that comments during a proposal's comment period help them fine-tune the proposed regulation.
While CUNA commended steps NCUA is considering for more regulatory relief, it noted that most credit unions do not feel their regulatory burdens are getting any lighter. Until that milestone is reached, regulatory relief will continue to be a top priority for CUNA.