NCUA Vice Chairman Kyle S. Hauptman during a meeting of the NCUA Board.
As Prepared for Delivery on December 14, 2023
While the change in methodology nearly doubles the number of exempt federal credit unions to 211, raising the fee exemption to $2 million in average assets for federal credit unions is proper. The last time we adjusted the exemption level was in 2012. Since then, the average assets of federal credit unions have approximately doubled.
Going from a threshold of $1 million to $2 million is appropriate but may not be enough. I don’t pretend to know the perfect number. These sorts of thresholds are somewhat arbitrary. I support seeking comments from stakeholders in the near future on the possibility of increasing the threshold to $5 million. In the meantime, I am grateful this new methodology indexes the exemption threshold based on growth in federal credit union system assets.
To review, for a $1 million credit union, NCUA would’ve only received about $190. For a $2 million credit union, NCUA would get about $380. So, we had to calculate a bill, send it to the right person, and then the credit union has an item on their to-do list. And, of course, the credit union could be late paying the bill, which requires someone at the NCUA to follow up with the credit union. All for a max of $380. Eliminating all that hassle means the NCUA forgoes a maximum of $380. That seems like a good deal for all involved.
This all has precedent in many other parts of government. For example, the IRS has a standard deduction, for which the Treasury decided to forgo revenue in return for eliminating work for both taxpayers and the IRS itself. Today we’re doing something similar.
In addition, it's no secret that the regulatory and financial burden on small credit unions is disproportionate. For many of them, it is not an exaggeration to say it is a threat to their existence.
I sincerely appreciate the exclusion of certain assets to compute the operating fees. It is a step in the right direction, but eliminating the fee does not necessarily eliminate the paperwork burden.
As I have said before, the regulatory and financial burdens on small credit unions are like a death from a thousand cuts. Small credit unions must comply with the same regulations as the largest credit unions. In some cases, the NCUA is examining them for compliance, but the regulations are the same. It’s not the small fee, it’s all the small fees — from multiple agencies — not just the NCUA. It’s not a single one-page form for compliance, it’s all the one-page forms.
I realize this change in methodology is only intended to address fees, but I want to be sure we take every opportunity to reduce the paperwork burden as well.