WASHINGTON—Both NAFCU and CUNA are asking NCUA to make adjustments to its proposed changes to operating fee structure methodology.
The trade associations each sent letters to the agency in response NCUA’s request for comment on the proposed rule.
NAFCU said it has offered recommendations to improve the methodology and increase its cost effectiveness, the trade association said
Among the changes being proposed by the agency is increasing the operating fee exemption from $1 million in assets to $2 million. The agency has sought comment on whether a tiered structure would be more equitable for allocating the operating fee.
In the NAFCU letter, Senior Counsel for Research and Policy Andrew Morris made three primary recommendations:
- Increase the small credit union exemption threshold to $5 million in total assets. Such a change, wrote Morris, “strikes the appropriate balance between offering meaningful relief to very small credit unions and ensuring that a fair portion of are covered.”
- Offset any reduction in collected operating fees or redistribution of fees that may result from changes. To make such an offset, NAFCU is calling for proportional cuts to the NCUA budget “rather than charg[ing] the difference to non-exempt FCUs…[W]e encourage the NCUA to operate in a fiscally prudent manner to reduce waste and ensure FCUs’ operating fees are not excessive”
- Ensure CUs understand potential changes. NAFCU recommended NCUA ensure credit unions understand the three-tier operating fee methodology with models that show how fees increase or decrease at different asset ranges
On the higher exemption threshold, Morris added that “a $5 million exemption threshold also sits below the FCU Act’s de minimus threshold governing the applicability of generally accepted accounting principles (GAAP) and the regulatory threshold the NCUA uses to designate credit unions as ‘new’ for prompt corrective action purposes.”
CUNA’s Comment
While saying it fully supports increasing NCUA’s operating fee exemption threshold, CUNA said it also believes $5 million is more appropriate than the proposed $2 million, it wrote.
“A doubling of the threshold from $1 million to $2 million is a step in the right direction. However, we ask the agency to go even further by considering exempting FCUs up to $5 million in assets from paying an operating fee,” the CUNA letter reads. “While the amount of the operating fee collected by FCUs between $1 million (or $2 million as proposed) and $5 million is relatively small in the aggregate, it accounts for real dollars that are diverted from serving the members of the nation’s smallest federal credit unions—a great many of which serve financially fragile consumers on the lowest rungs of the economic ladder.”
Additional Recommendations
CUNA said it further believes NCUA should commit to offsetting any increase in the operating fee paid by all federal credit unions or those within certain asset classes by a proportionate reduction in the agency’s budget, and notes reducing agency expenses would reflect real savings to all credit unions.
CUNA’s comments note the alternatives listed in the request for comment do not provide sufficient information, and CUNA is asking NCUA provide specific information on possible changes to the current fee schedule methodology to allow the industry to provide better informed thoughts on any adjustments.
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