WASHINGTON–Why the disagreement over succession planning, which everyone seems to agree is important? In a letter sent to the Office of Management and Budget (OMB) this week, America’s Credit Unions said it wants to see NCUA’s succession planning rule rescinded. NCUA’s former chairman believes thats a big mistake. Here’s what each side has to say about the debate.
As the CU Daily reported here, America’s Credit Unions has sent a 23-page letter to the OMB outlining numerous rules it believes can be done away with in response to an executive order from President Trump that is designed to “commence the deconstruction of the overbearing and burdensome administrative state.”
One such overbearing and burdensome rule, according to America’s Credit Unions, is Succession Planning Rule (12 C.F.R. Parts 701 and 741), which was finalized in December of 2024 and which is to go into effect Jan. 1, 2026.
What Would be Required
It requires every federally insured credit union board to:
- Adopt and maintain a written succession plan covering specified senior positions
- Review the plan at least every 24 months
- Ensure newly appointed directors become familiar with the plan within six months of taking office
What’s the Reasoning?
Given that many mergers, as the CU Daily frequently reports, are driven by a lack of management succession, why does America’s Credit Unions want the rule eliminated?
In its letter to OMB it wrote that it has been opposed to the rule because it transforms what has always been best-practice guidance into “a prescriptive mandate that inserts the regulator into board-level governance decisions better handled through supervisory dialogue or voluntary guidance.”
“Credit unions have noted that the new regulation duplicates existing strategic-planning requirements and ignores the diversity of governance structures across the system,” ACU wrote. “Smaller institutions in particular lack dedicated human-resources staff; they must now draft formal succession documents, track review calendars, keep directors trained on details, and maintain documentary evidence for examiners. Commenters warned the Board that the added compliance burden could accelerate—not prevent—small credit union consolidation by pushing volunteers toward merger as the simplest path to relief.”
‘Non-Binding’ Rule Sought
America’s CUs further told OMB that many in credit unions have urged the agency to issue non-binding guidance similar to the approach taken by the banking regulators, observing that guidance would preserve flexibility while still highlighting the importance of planning.
“Despite those concerns, the final rule retained most of the prescriptive elements, merely extending the review cycle from one year to two,” the trade group said. “The Board’s own analysis concedes that only 21 credit unions exceed $10 billion in assets, yet the rule sweeps in more than 4,000 smaller institutions that ‘would have more streamlined succession plans,’ implicitly acknowledging the disproportionate impact on limited-resource entities. The agency’s promise of templates and training does not offset the fixed cost of drafting, updating, archiving, and examiner-proofing a formal plan, nor the opportunity cost of board time diverted from member-service priorities.”
Former Chairman Responds
A day after America’s Credit Unions sent its letter to OMB, the CU Daily spoke with former NCUA Chairman Todd Harper and Board Member Tonya Otsuka—who are currently suing the Trump administration after being fired in mid-April—as part of a broad ranging discussion that can be read here.
Among the subjects discussed was America’s CUs effort to have the Succession Planning rule rescinded.
“It doesn’t come as a surprise that America’s Credit Unions wants to cut regulations,” said Harper. “America’s Credit Unions complains all the time about the numbers of credit unions going away and here’s a rule that is specifically in place to help credit unions continue and to plan for their futures. There was just a story the other day about a large credit union that is paying out a large amount of money to its executives to merge into another credit union, because they want to go away.
“We must have succession planning. The rule we did is not overly burdensome. It is scaled depending on the size of the institution. What’s more, we had unanimous agreement on that rule,” Harper added.
