ALEXANDRIA, Va. (1/15/13)--Credit unions will see some real regulatory relief after last week's National Credit Union Administration action to increase the asset-size threshold that defines a "small" credit union. The threshold was raised to $50 million as recommended by the Credit Union National Association, up from $10 million.
"There are at least three areas where this new threshold will make a real difference for covered credit unions struggling with regulatory burdens," CUNA Deputy General Counsel Mary Dunn said Monday.
The threshold increase means that two-thirds of all credit unions are exempt from the following NCUA rules:
- Interest Rate Risk (IRR) regulations; and
- Prompt corrective action (PCA) risk-based net worth requirements.
Also, for all future rulemakings, the NCUA must now consider credit union with less than $50 million in assets, rather than $10 million, in determining burdens and possible exemptions.
The NCUA's IRR rule requires credit unions to develop and maintain a written IRR policy and an IRR management program. The agency has also tied National Credit Union Share Insurance Fund coverage to compliance with this IRR rule, in some cases.
Under PCA rules for credit unions, as an institutions capital level deteriorates, its CAMEL rating goes up. When that happens, regulators are required to increase supervision and take actions meant to force management to make improvements.
Dunn said the NCUA's pending emergency liquidity rule is one rule that the agency may need to reconsider. That rule, as currently proposed, would:
- Require federally insured credit unions (FICUs) with less than $10 million in assets to maintain basic written emergency liquidity policies;
- Require FICUs with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations; and
- Require FICUs with assets of $100 million or more to have access to a backup federal liquidity source for emergency situations.
The threshold increase will also make assistance from the NCUA's Office of Small Credit Union Initiatives (OSCUI) available to more than 4,600 credit unions--an increase of 2,270. However, the agency has noted that OSCUI grants are still only available to designated low-income credit unions, not all "small" credit unions.
CUNA has also noted that the threshold increase does not impact the agency's determination of which credit unions get streamlined examinations. While that issue is under separate consideration, the $10 million threshold will continue to apply, at least for this year.