KENNEWICK, Wash. —Saying targeted relief would slash storage costs, free up staff and let smaller CUs focus on members rather than “keep-forever” paper, the Endangered Small Credit Union Defense (ESCUD) told NCUA in a comment letter it strongly supports a proposal to simplify and modernize 12 CFR Part 749, the Vital Records Preservation Program.
The proposal was made as part of NCUA’s Deregulation Project.
“Our small credit unions are hyper-local, single-office or limited-branch operations that live the not-for-profit cooperative model every day — returning profits to members and underserved communities,” wrote Doug Wadsworth in the letter. “The regulatory relief in this proposal will deliver immediate, tangible cost and time savings.”
Wadsworth is president/CEO of the $75 million Tri-Cities Community Federal Credit Union and also leads ESCUD.
According to ESCUD, the proposal “correctly narrows” Part 749’s focus to what “truly matters after a catastrophic event: the ability to quickly reconstruct vital member services such as share and loan balances, month-end financials, bank reconcilements, and emergency contacts. It leaves broader operational and historical record retention decisions to each credit union’s board, legal counsel, statutes of limitations, and business judgment — precisely the flexibility small credit unions have been begging for. “
Two Testimonials
In its comment letter, ESCUD included two testimonials:
- Marcy Cole-King, CEO of California Community Credit Union in Sacramento, Calif.: “We’re a small credit union with 14 employees across three branches, so our time and resources are limited. Scanning documents for permanent retention isn’t feasible for us right now… We continue to pay for document storage and destruction. We pay about $6,200 a year. Permanent records are the biggest issue for me: Minutes, 5300/4501 reports, supervisory committee audits, membership applications, journals, general ledger, member statements, bank reconcilements, etc. I remain puzzled as to why these records are classified as permanent. Nearly everything has a statute of limitations, and in my experience, no one has ever requested records from 20 years ago—let alone from 87 years ago… Given this level of oversight [annual CPA audits, DFPI exams, NCUA reviews], it’s unclear what purpose permanent retention truly serves.”
- Doug Wadsworth: “Vital record and document retention regulations at small credit unions are a confusing and expensive nightmare… I still have at least two dozen full boxes of ‘keep forever’ documents I am never allowed to destroy, and many are nearly 60 years old… These are stacked in heaps in my office attic, gathering dust forever… I also have probably 100 more boxes full of ‘temporary retention’… The regulations are confusing and overlapping, so small CUs (like me) are scared of destroying those until after 7 years… No examiner has ever asked to look at any of these retained documents, ever — in my nearly 20 years as the CEO.”
What Survey Found
As the CU Daily reported earlier, ESCUD noted its January 2026 survey of small credit unions found regulatory burden–which includes excessive document retention–among the top four most expensive and time-consuming obstacles to their financial health.
“The proposed rule would help free small credit unions from paying for off-site storage, maintaining obsolete equipment, managing ever-growing attics full of paper and microfiche, and wasting staff time on overly complex policies,” ESCUD said.
ESCUD also voiced support for the proposal’s minor clarifying updates, including allowing electronic preservation logs and explicitly addressing third-party processors — updates that modernize the rule without adding new burdens while preserving the core safety-and-soundness goal of disaster recovery.
“ESCUD strongly urges the Board to finalize the rule as proposed,” the letter states. “We stand ready to provide additional small-credit-union compliance-cost examples or participate in any further dialogue that would be helpful.”
The deadline for comment on the proposal is May 11.
