As Prepared for Delivery on July 21, 2022
Thank you, Scott, and Rachel for the presentation.
Earlier this board meeting, we discussed the budget. And this item is good news for the budget. Without this threshold change, the ONES team – those who examine the larger credit unions –had projected the need for up to 14 new staff because of the number of credit unions crossing the $10 billion threshold and moving to ONES supervision.
Adjusting this threshold keeps supervision for credit unions crossing the $10 billion threshold with their designated regional NCUA office until they hit $15 billion in assets. However, credit unions that move into the $10 billion category must still comply with capital planning requirements that come with it. The only thing we are changing is who is responsible for supervision. This was not intended as regulatory relief – although I understand the desire to ask for relief from regulatory burden at every opportunity.
Without this change it is safe to say, new staff in ONES would be needed in the immediate future. I want to emphasize that this is a money-saving decision by NCUA.
I want to mention that I understand WHY some people initially thought today’s change was about something different. They heard the words “NCUA changing thresholds from $10 billion to $15 billion” and initially got excited in the belief that today’s action had something to do with regulatory relief. And while my view is well-known that some regulation benefits the regulator more than the regulated, today’s vote was never intended to be more than a money-saving, internal change to NCUA’s operations.
This change is just a stop gap, however. As credit unions grow in assets, more supervision will eventually move to ONES. Today, we are at an appropriate point to thoughtfully evaluate our supervision strategy.
I’d like to ask my fellow board members to commit resources for a review of asset thresholds in the next year. Not just adjusting the thresholds themselves, but other tools as well. For example, one elegant way that agencies give regulatory relief is via the regulated entities earning a less-frequent exam cycle (or other positives) through stellar exam results and high capital levels. This sort of regulatory relief aligns incentives for all parties: NCUA can focus on the credit unions that need help, and the credit unions that earned regulatory relief really want to keep that status via continued excellent performance.
The successful supervision of credit unions as unique, member-owned cooperatives always brings its own challenges. A review of asset thresholds would help us be more deliberate in our strategy. That said, I commend staff for coming up with today’s change that saves money and ensures more supervision occurs at the regional level.
Mr. Chairman, this concludes my remarks. I do have one question.
- Can you review how this changes things for a credit union that is sitting at, say, $9.9 billion in assets and may soon go over the $10 billion threshold. Thank you.