Updated Small Entity Rule to Relieve 733 More Credit Unions
September 18, 2015
September 18, 2015
Reporting from CUNA. Credit unions with under $100 million in assets are now considered “small entities” under the Regulatory Flexibility Act, the National Credit Union Administration board decided Thursday. According to the NCUA, this means that 733 additional federally insured credit unions, and a total of 4,690 federally insured credit unions, are eligible for special consideration regulatory relief in future rulemakings.
The NCUA analyzed a range of metrics, including growth rates for assets, deposits, loans and membership, the ratio of operating costs to assets and merger and liquidation rates, when deciding on the $100 million threshold.
“Raising the small credit union threshold is good step in creating a more reasonable regulatory environment for smaller credit unions,” said John Trull, AVP of Regulatory Affairs for the Northwest Credit Union Association. “We support the move from $50 million to $100 million—it is consistent with what small credit unions in the Northwest felt was prudent, and we appreciate Debie Keesee’s leadership on this front.”
NCUA Chair Debbie Matz said the agency examined raising the threshold to $250 million and $500 million, but an economic analysis showed difficulties.
“In today’s credit union system, an asset threshold above $100 million is the logical floor for complex credit unions, and our data analysis shows a threshold under $100 million meets the modern definition of a small credit union,” Matz said. “If we had chosen the same small entity threshold of $550 million as the banking industry is required by law to do, we would have created five times the asset exposure to the National Credit Union Share Insurance Fund.”
The NCUA raised the threshold to $50 million in 2013, with a pledge to re-examine within two years. Going forward the agency will re-examine the threshold every three years, as part of its rolling regulatory review, with the next reconsideration coming in 2018.
The rule will become effective 60 days after its publication in the Federal Register.
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