WASHINGTON–America’s Credit Unions is placing part of the blame for all of the mergers in credit unions on “regulatory burden.”
In a letter to the House Financial Services Subcommittee on Financial Institutions, America’s Credit Unions President and CEO Jim Nussle wrote, “We have seen the number of mergers rise in recent years as the regulatory burden on community institutions has skyrocketed. Quite simply, it is getting harder to survive as a community financial institution due to these burdens.”
The letter, which was sent ahead of a House Financial Services Subcommittee on Financial Institutions’ hearing on bank mergers and de novo formation, shared America’s Credit Unions’ recommendations to reform federal banking agency merger policies as well as specific solutions to issues de novo credit unions face.
Where Focus Should Be
According to Nussle, any effort to remedy what is happening on the merger front must focus on providing regulatory burden relief to community financial institutions.
The letter urges the subcommittee to also keep credit unions in mind while they are examining challenges faced by de novo banks, as there are “similar challenges facing de novo credit unions and potential solutions to help them too.”
Three Recommendations
The letter offers three recommendations:
- Fix the size of new credit unions. “To facilitate the successful chartering of new credit unions, apply more flexible Prompt Corrective Action net worth standards for that entity’s first year of operation,” America’s Credit Unions said.
- Increase the threshold for Select Employee Groups. The current NCUA threshold of 3,000 members to determine whether a simplified application process is allowed is outdated and no longer reflects the growth of the credit union industry. “Increasing this threshold would positively contribute to the formation of de novo credit unions,” the letter states.
- Allow provisional charters. “The NCUA’s provisional charter program provides organizers with approximately one year to obtain startup capital and has been relatively successful,” stated America’s Credit Unions, which is asking Congress to permanently authorize the provision charter program.