WASHINGTON (11/19/13, UPDATED 4:00 p.m. ET)--The Credit Union National Association is urging the National Credit Union Administration to do all it can to cut credit union regulatory burdens and build a regulatory environment and examination culture that enhances the ability of credit unions to serve their members.
In a letter to the NCUA, CUNA detailed a list of regulatory areas that are of key concern to credit unions, and also noted the impact of the Consumer Financial Protection Bureau and other regulators on the daily operations of credit unions.
CUNA President/CEO Bill Cheney wrote to NCUA Chair Debbie Matz:
"We urge the agency, rather than continuing the parade of new rules that apply on a broad basis, to utilize its array of supervisory powers to focus on problem credit unions. We also urge NCUA to do all it can to allow well-managed credit unions the space and latitude they need to serve their members of today and to attract new members for tomorrow."
CUNA also advocated that the NCUA always consider the magnitude of regulatory requirements--from a variety of regulators--that credit unions must already meet in all areas of their operations before imposing any new requirements. CUNA added that the agency should work to eliminate rules that are outdated, unnecessary, or simply provide minimal benefits.
Among the letter's other top issues are two that directly affect credit union bottom lines, the NCUA budget, which is funded by the credit union system, and the assessment for the Corporate Stabilization Fund for 2014. Both topics are scheduled for action at the Nov. 22 NCUA open board meeting.
CUNA urged the agency to keep credit unions' costs as low as possible.
"CUNA, the leagues, and credit unions do not want the agency to be underfunded. At the same time, we strongly oppose large, steady increases in the face of the solid financial performance by the credit union system, which continues to rebound from the financial crisis," wrote CUNA's Cheney in the Nov. 18 letter.
"Credit unions are frustrated about the agency's budget due in large part because there seems to be little opportunity for oversight by Congress or the credit unions that pay the costs of NCUA's expenses or a connection between spending and the achievement of strategic goals.
CUNA also addressed the agency's plan to regulate credit union service organizations (CUSOs), which is also on the NCUA agenda this week. CUNA underscored that, under the Federal Credit Union Act, the NCUA has very limited authority where CUSOs are concerned.
Other issues addressed in detail in the letter include:
- Risk-based net worth: CUNA noted that the NCUA has ample supervisory tools to handle problem cases and urged the agency to advance supplementary capital;
- Examination and exam appeals process: CUNA encourages the development of an Examinations Working Group;
- Financial Accounting Standards Board (FASB) proposals and rules: CUNA reiterated that NCUA's support on FASB issues is critical;
- NCUA's derivatives proposal: CUNA recommended the agency move forward to approve the plan that would let well-run federal credit unions to use simple derivatives for the sole purpose of hedging against interest rate risks; and,
- CUNA said the NCUA should allow for an expedited process, when warranted for waivers for member business lending and loan participation requirements.
The comprehensive CUNA letter also focused on the NCUA's important role in payments developments, its engagement on cybersecurity coordination, and the importance that regulatory strictures not act to discourage student lending.
CUNA further noted that the NCUA's pending proposal on stress testing for the largest credit unions would be costly and is not required by the Dodd-Frank Act.
CUNA commended the NCUA for a number of its recent actions that brought regulatory relief, and underscored the importance of the agency's October guidance to improve the federal examination process, and the NCUA's action this year to cut its operating budget by $2.6 million from its original projections, among other important decisions. CUNA added that the agency NCUA should use its own positive regulatory steps as a template for future regulatory relief for credit unions.
A copy of the letter was sent to each of the three NCUA board members: Chair Debbie Matz and board members Michael Fryzel and Richard Metsger.