ARLINGTON, Va.—NAFCU and CUNA have taken different views in their comments to NCUA on its proposal to increase the definition of small credit unions to $100 million from $50 million.
CUNA is telling NCUA the new threshold works, while NAFCU contends the new cutoff is far too low.
Emphasizing that the Regulatory Flexibility Act (RFA) authorizes NCUA to promulgate its own definition of “small entity,” NAFCU believes the language of the RFA does not require the use of a “bright-line asset threshold.”
“The RFA’s language only mandates that the entity ‘is not dominant in its field,’” wrote Regulatory Affairs Counsel Alexander Monterrubio. “As NAFCU has consistently maintained, arbitrary asset thresholds are not an appropriate measure for dictating a credit unions’ eligibility for regulatory relief and run the risk of bifurcating the industry.”
$100 Million Too Low
But if NCUA insists on using an asset threshold, NAFCU argued that the threshold for small entity status should be increased beyond its current level of $50 million or less in assets, and beyond $100 million.
“NAFCU recommends that NCUA adopt the Small Business Administration’s small business size standard for credit unions of $550 million or less in assets or, in the alternative, the Consumer Financial Protection Bureau’s threshold of $175 million or less in assets, used for purposes of forming panels under the Small Business Regulatory Enforcement Fairness Act.”
“While we welcome the prospect of regulatory relief to more credit unions, with the ever-growing regulatory compliance burden on smaller credit unions, we believe a threshold of $550 million but not less than $175 million is far more appropriate,” continued Monterrubio.
Monterrubio cautioned that by relying on a $100-million threshold, NCUA will not consider many small, well-capitalized credit unions when promulgating rules.
“For instance, one of NAFCU’s members has almost $150 million in assets, yet operates out of one branch, and only employs fifteen full-time employees. Under the proposed rule, this credit union will not be considered a ‘small entity,’ and therefore will not be taken into consideration when NCUA is studying the economic impact of future rules on credit unions with ‘small entity’ status,” Monterrubio said.
$100 Million Works
CUNA’s letter, signed by President and CEO Jim Nussle and Debie Keesee, chairman of CUNA’s Small Credit Union Committee, says the trade association supports the proposed $100-million asset threshold for RFA analysis requirements, “as this asset level sufficiently captures small credit unions that have unique challenges and particular sensitivity to even the smallest regulatory requirement. Furthermore, we urge NCUA to adjust this threshold annually by an index that continues to capture a percentage of the smallest credit unions.”
The letter noted that credit unions are increasingly concerned regarding looming regulatory burdens and that CUNA urges NCUA “to do all it can to minimize regulatory requirements, including refraining from imposing new regulatory requirements that are not necessitated by statutes or well-documented safety and soundness issues. We also urge NCUA to do all it can to provide positive regulatory incentives to all credit unions – regardless of size – including meaningful flexibility wherever possible.”