Credit union trade groups are calling on the National Credit Union Administration to “
A recent letter from the Credit Union National Association to NCUA alleges that the regulator has not moved quickly enough to grant an 18-month exam cycle to credit unions with $3 billion or less in assets following a provision earlier this year in the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) that raised the threshold for community banks from $1 billion to $3 billion.
"Credit unions are concerned that NCUA has not taken steps to address the increased commercial appraisal thresholds the banking agencies adopted back in April,” wrote CUNA President and CEO Jim Nussle. “These competitive advantages given to banks translate into tangible costs for credit unions.”
The debate ultimately comes down to size. Fewer than 100 credit unions hold assets of $1 billion or more, according to Monique Michel, CUNA’s senior director of advocacy and counsel. That translates to roughly 5 percent of all credit unions, compared with 600 banks holding $1 billion or more in assets.
Banks “dwarf” credit unions, said Michel, given the quantity that fall in between the $1 to $3 billion range.
But community bankers don’t see differences in examination parity as a problem, saying that the two industries aren’t comparable.
“Comparing the banking industry to the credit union industry is comparing apples to oranges,” said Chris Cole, vice president and senior regulatory counsel at the Independent Community Bankers of America. “If [Nussle] really wanted to level the playing field, he should call for the taxation of his members.”
Cole added that what banks called for and received in the reg relief package “only applies to banks deemed well-capitalized, and it comes to expansion of about 400 banks that fall between $1-$3 billion that would qualify for this [lengthier cycle].”
n the wake of S. 2155 being signed into law, Rep. Claudia Tenney (R-NY) introduced the Small Bank Exam Cycle Improvement Act (H.R. 5076), which spurred credit union trade groups to push NCUA to expand the 18-month exam cycle for low-risk credit unions.
In addition to CUNA urging changes from NCUA, the National Association of Federally-Insured Credit Unions is also on board.
"We have long advocated for the NCUA to use its authority to return all healthy and well-run credit unions to an extended exam cycle, regardless of size," said NAFCU President and CEO Dan Berger.
Exams on the mind
The push for exam changes comes at a time when NCUA is already in the midst of major changes, having recently completed a
While banks have looked to Congress to help improve the exam process, CUNA insists any work that needs to be done can be accomplished by NCUA without needing any legislation.
"I think as we see Congress moving toward additional regulatory reform with regard to financial institutions, there's always a possibility [for Congress to move forward with legislation], though I suspect such a vehicle may be geared more toward capital formation initiatives,” said CUNA’s Michel. “The current NCUA Board is reasonable and they care about the credit union system [so] I'm not convinced a legislative solution would be necessary here."
NCUA declined Credit Union Journal’s request for comment.
