ALEXANDRIA, Va.–While the NCUA board voted 3-0 to raise the definition of “small” credit union to $100 million in assets, as CUToday.info reported here, that didn’t keep two of the board members from debating a point in the lead-up to that vote.
After NCUA board member Mark McWatters said he didn’t see any reason why the definition of “small” couldn’t be as large as $500 million, NCUA Vice Chairman Rick Metsger responded with his own comments that the “data doesn’t warrant a 10-fold increase to $500 million. We need to realize that what is small for a bank is different from what is small for a credit union. No one has articulated that more strongly than the management of small credit unions that do not want to see us dedicate more resources to larger credit unions.”
Metsger noted that “small” credit unions represent one-third of CU assets, and differed with McWatters’ earlier statement that credit unions primarily compete with other banks by saying smaller credit unions primarily compete with other credit unions.
Metsger added that if NCUA applied the same 6% ratio the FDIC uses for defining “small,” then the asset cap to meet that definition in credit unions would be $58 million.
“So this new threshold isn’t too small, you might even argue it’s a little too high,” said Metsger. “The definition of small needs to be defined in the context of credit unions.”
That led McWatters to respond that “the vice chair made the observation that increasing this threshold above $100 million could put some strain on (the office of Small Credit Union Initiatives). I support (OSCUI Director) Bill (Myers) and his office. I want to state that clearly on the record that I support Bill’s mission. You’re not going to find a greater champion than me. I think it’s the core of what we are doing at NCUA and of credit unions’ mission. But to make (the definition of small) dependent upon the number of people within Bill’s office (and its ability to serve small CUs), I don’t follow that logic. I do agree that if the threshold was taken to $500 million, then maybe there could be no more one-on-one consulting…
“So I come back to my baseline that small is small and I’m not really interested in metrics comparing the pool of banks versus the pool of credit unions,” continued McWatters. “I don’t think credit unions deserve that. I think we should review our rules with the view that virtually all credit unions are small. If you ask credit union CEOs who do you compete with, they will say other financial institutions, not other credit unions.”
After asking NCUA Chairman Debbie Matz if he might comment further, Metsger stated, “I must have missed something. I didn’t say anything about a strain on Bill’s office. The strain would be on this board and the issues that come before us.”