Regulatory Changes for Credit Unions Expected in January

The National Credit Union Administration (NCUA) is expected to issue four final rules on Jan. 10, 2013, part of a number of regulatory changes on the horizon in the New Year.

One positively anticipated rule expected to be issued in January will be a final rule raising the asset threshold that defines a small credit union from $10 million to $30 million. The benefits of the small credit union designation include exemption from certain rules and regulations, and the NCUA also provides technical assistance, grants and other services to small credit unions through its Office of Small Credit Union Initiatives.

The NCUA would have likely adopted the $30 million threshold at its December board meeting after only receiving a handful of comments during the initial 30-day comment period. However, Northwest Credit Union Association (NWCUA) Board Chair Debie Keesee drew attention to the fact that a $30 million asset threshold was not high enough to accurately reflect all small credit unions. She worked with the Association to extend the comment period and followed that up with a strong advocacy effort encouraging the NCUA to adopt a higher asset threshold.

Part of that effort involved working with the Association on a letter that included the results of a survey reflecting the opinion of a number of Northwest credit unions that overwhelmingly support the need for a higher asset threshold. Keesee also encouraged Mike Schenk at the Credit Union National Association (CUNA) and BECU’s Parker Cann to weigh in on the issue.

“I believe that our advocacy effort will be successful and may result in the NCUA board adopting a threshold that could be as much as $50 million,” Keesee said.

The second agenda item is a simple technical change that did not require a Notice of Proposed Rulemaking. This rule will change the insured deposits from $100,000 to $250,000 in the Federal Charter to conform to the Dodd-Frank Act.

The NCUA will also finalize a rule related to the Low-Income Credit Union (LICU) designation. The Association expects the NCUA to give credit unions 90 days instead of the original 30 days to respond to the designation when eligible. Based on comments received from credit unions, the NCUA may also clarify the process for getting rid of the LICU designation should a credit union no longer find it beneficial.

The fourth proposed rule expected to be finalized would allow the NCUA to use the highest CAMEL rating for state chartered credit unions for insurance purposes. In the vast majority of cases, state and federal regulators agree on the CAMEL rating, and the NCUA has the ability to review management decisions of credit unions that are deemed CAMEL 4 by either the state or federal regulator.

In the rare circumstance that the federal and state regulator issue different ratings, if a state regulator issues a lower CAMEL rating than the NCUA, the state rating would still apply for regulatory purposes not related to the share insurance fund. Early indicators suggest that the final rule will be similar to the proposed rule with additional background information so that credit unions can better understand the rule’s scope.

The Association shares the concerns of the National Association of State Credit Union Supervisors (NASCUS) and CUNA that the proposed rule is a first step in eroding the dual charter system.

The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy John Trull at, or at 503.350.2209.

Posted in Advocacy News, Federal, NCUA.