Compliance Blog

Written by Michael Coleman, Regulatory Compliance Counsel

Last week at the September NCUA Board Meeting, the NCUA Board proposed a rule and an IRPS that would update the definition of a “small entity” under the Regulatory Flexibility Act to include federally insured credit unions with less than $30 million in assets. This would be an increase from the current $10 million threshold.

Here is an interesting excerpt from the Board Action Bulletin:

“In a new effort to ensure that the threshold will be modernized more frequently in the future, the Board voted to reevaluate the small credit union definition every three years. Each reevaluation would consider credit union asset growth combined with inflation and industry consolidation.

The Regulatory Flexibility Act generally requires federal agencies to determine and consider the effect of proposed and final rules on small entities. The proposed rule would grant relief to 1,603 federally insured credit unions and bring the total number covered by the definition to 4,041, an increase of 66 percent.

When NCUA adopted the $10 million threshold in 2003, 52 percent of credit unions had asset levels that qualified them as “small entities.” Today, only 35 percent of credit unions fall under the $10 million threshold. The proposed rule change would raise the percentage of small credit unions below the threshold to 58 percent.” (emphasis added)

While this increase is undoubtedly beneficial for credit unions, especially those in the $10 million to $30 million range, raising the threshold even higher would be even more beneficial. Here is what NAFCU President and CEO Fred Becker had to say:

"Although NCUA broadening the definition of small credit unions to $30 million is a step in the right direction, it should go much higher to ease the burden for even more small credit unions"