WASHINGTON—Both credit union trade groups have filed comment letters with NCUA regarding proposed rulemaking related to its Office of National Examinations and Supervision (ONES) and a plan that would raise the threshold to $15 billion in assets from $10 billion for being supervised by ONES.
To lessen any disruption, the proposal calls for credit unions already subject to ONES supervision are “grandfathered” and remain subject to such supervision even if they are below the proposed $15 billion threshold.
"NAFCU supports efforts to conserve the NCUA’s existing supervisory resources by tailoring the threshold for specialized supervision by [ONES] according to risk-based criteria," wrote Senior Counsel for Research and Policy Andrew Morris. "Increasing the asset threshold used for determining whether a covered credit union will be supervised by ONES is appropriate given the industry’s extraordinary, pandemic-related asset growth over the past two years and low levels of fundamental risk."
Higher Threshold Suggested
Morris recommended NCUA increase the proposed Tier 1 threshold from $15 billion, as proposed, to $20 billion to better reflect growth of insured shares. In addition, Morris requested the NCUA "explicitly exclude non-grandfathered Tier I credit unions from the proposed definition of 'ONES credit union' for the sake of clarity."
Morris also encouraged the NCUA to ensure that appropriate coordination exists between the agency's regional offices and the CFPB to prevent instances of examination overlap or confusion resulting from the application of differing standards and expectations.
CUNA Response
CUNA also filed a comment letter.
“We are largely supportive of this proposal,” the letter reads. “However, we urge the NCUA to ensure there is sufficient expertise at the Regional Office level to properly supervise this new asset class (between $10 billion and $15 billion) without increasing any safety and soundness risks to the National Credit Union Share Insurance Fund (NCUSIF).”
Other Suggestions Made
CUNA also suggested in its letter that NCUA:
- Closely monitor for any unintended consequences related to the proposed change—primarily increased risk to the NCUSIF—and adjust accordingly.
- Have sufficient training, expertise, and tools for examiners to perform consistent and efficient examinations across all regions and for all covered credit unions.
- Grandfather in tier I covered credit unions that are currently supervised by ONES.
- When utilizing the “reservation of authority” provision, NCUA should have a clearly demonstrated rationale for transferring a tier I credit union from its Regional Office to ONES prior to reaching the $15 billion asset threshold.
- Be mindful of any disconnect between NCUA examinations and Consumer Financial Protection Bureau (CFPB) examinations that may occur in light of increasing the ONES threshold above $10 billion.