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NAFCU Senior Counsel for Research and Policy Andrew Morris responded to the NCUA’s request for comment (RFC) on its proposed changes to operating fee structure methodology with recommendations to improve the methodology and increase its cost effectiveness.

The RFC includes changing the operating fee exemption from $1 million in assets to $2 million and seeks input on if a tiered structure is equitable for allocating the operating fee.

Morris made three primary recommendations to the agency:

• increase the small credit union exemption threshold to $5 million in total assets, noting that it “strikes the appropriate balance between offering meaningful relief to very small credit unions and ensuring that a fair portion of [federal credit unions (FCUs)] are covered”;
• offset any reduction in collected operating fees or redistribution of fees that may result from changes to the tiers by making proportional cuts to the NCUA budget “rather than charg[ing] the difference to non-exempt FCUs…[W]e encourage the NCUA to operate in a fiscally prudent manner to reduce waste and ensure FCUs’ operating fees are not excessive”; and
• ensure FCUs understand potential changes to the three-tier operating fee methodology with models that show how fees increase or decrease at different asset ranges.

On the higher exemption threshold, Morris added that “a $5 million exemption threshold also sits below the FCU Act’s de minimus threshold governing the applicability of generally accepted accounting principles (GAAP) and the regulatory threshold the NCUA uses to designate credit unions as ‘new’ for prompt corrective action purposes.”

NAFCU will continue to advocate for relief and clarity for the industry under the NCUA’s operating fee structure methodology.