Regulatory Relief Priorities

Small Credit Unions are in Danger of Extinction

Reduced regulatory burdens will lower our compliance costs, improve operational efficiency, and allow us to better focus on serving members who need it most, for generations to come. Some areas for which we are advocating for regulatory relief are as follows:

Target Audience: Congress

These priorities involve changes to federal statutes or rules set by agencies like FinCEN, CFPB, or under laws such as the Bank Secrecy Act, Home Mortgage Disclosure Act, SAFE Act, Dodd-Frank Act, and Truth in Lending Act. Advocating to Congress is most effective for legislative amendments to thresholds, exemptions, or requirements, particularly for small credit unions under $500 million in assets, which face disproportionate compliance costs relative to their size and risk profile 

• BSA Compliance: Increase the CTR reporting threshold (set by BSA statute and FinCEN authority, small credit unions under $500 million in assets bear high costs for low-volume transactions).

• HMDA Reporting: Exempt small credit unions and revert to the 500 mortgages-per-year threshold (thresholds amended by Congress via EGRRCPA; CFPB implements; this would relieve burdens on small credit unions under $500 million, as emphasized in the 2018 EGRRCPA, which exempted institutions with under 500 originations to reduce reporting for low-volume lenders).

• NMLS: Reduce tracking and reporting requirements for small credit unions (rooted in SAFE Act passed by Congress; CFPB/NCUA enforce; disproportionately affects small credit unions under $500 million offering low-volume mortgages, as highlighted in NAFCU's regulatory relief activity pushing for exemptions in bills like the TAILOR Act).

• Qualified Mortgage (Price Controls): Exempt small credit unions from mortgage rate pricing controls under Regulation Z, HOEPA, or CFPB rules (established by Dodd-Frank Act; small credit unions under $500 million struggle with complex pricing for modest-risk loans).

• Mortgage Escrow: Exempt small credit unions from escrow requirements (part of TILA/Regulation Z, amended by Congress; eases complexity for small credit unions under $500 million).

Target Audience: NCUA (and/or DFI)

These priorities relate to NCUA-specific regulations, examination practices, and enforcement policies under the Federal Credit Union Act and NCUA rules (e.g., Parts 713, 715, 722, 741). Lobbying the NCUA Board for small credit unions under $500 million in assets, which represent minimal risk to the NCUSIF but face outsized burdens.

• CECL: Increase the compliance exemption threshold from $10 million to $500 million in assets (NCUA sets and enforces exemptions). We appreciate the "in-house" model NCUA developed for CUs under $100 million, but full exemption is warranted.

• Punitive & Irrelevant Documents of Resolution: Limit DOR issuance to specific serious cases (reduces conflict for small credit unions under $500 million, aligned with NCUA's Regulatory Modernization Initiative for less burdensome oversight).  IE: To cases where: (1) the CEO refuses compliance; (2) findings persist from prior exams; (3) issues pose immediate and significant safety risks; or (4) trust in management is lacking (requiring board involvement). 

• Reduced Examination Burden: Shorten exams, reduce frequency, and focus on safety/soundness for small credit unions (DFI conducts exams for state-chartered CUs; coordinates with NCUA; minimizes strain on small credit unions under $500 million posing minimal risk). 

• ALM/Rate Shocks: Eliminate requirements for income simulations or NEV analysis for small credit unions; accept simple GAP Analysis ( simplifies processes for small credit unions under $500 million).

• Over-Compliance Pressure: Reduce examiners' push for "best practices" beyond basic regulations (NCUA examiner guidance and practices; allows flexibility for small credit unions under $500 million, as advocated in NCUA's three-year regulatory review cycles).  Direct examiners to prioritize safety/soundness regulations, allowing flexible, in-house compliance for lower-risk areas and de-emphasizing minor issues.

• Reduce Supervisory Volunteer Expectations: Lower pressure on unpaid volunteers beyond simple tasks (NCUA sets expectations for supervisory committees; eases retention issues for small credit unions under $500 million).

• Bi-Annual Account Verification Audit & Reconciliation: Eliminate as redundant (required under NCUA supervisory committee rules; redundant for small credit unions under $500 million with modern fraud prevention).

• NACHA Audit: Eliminate annual audit requirement as redundant (enforced by NCUA examination procedures; unnecessary for small credit unions under $500 million using automated systems).

• Bond Insurance Board Signatures: Eliminate new regulatory hoops for bond renewal (adopted by NCUA in Part 713; reduces paperwork for small credit unions under $500 million).

• Eliminate “Private” Supervisory Interviews: Include CEO in meetings with Supervisory Committees (NCUA examination practices; prevents misunderstandings in small credit unions under $500 million, per NCUA's supervisory letters).

• Duplication of BSA Audits: Our CPA AUP Supervisory Audits already do a full BSA audit every 18 months, why does the NCUA have to re-hash the entire/exact thing?

• Double-Duty of Examiners state/federal: For state credit unions, does the NCUA really need to come to the entire audit? This sometimes results in 5-10 examiners at a tiny credit unions, for weeks at a time, effectively crippling their ability to do business.  Is that necessary? Is it good use of NCUA resources (limited budgeting and staffing)?

• Reduced Exam Prep Lists: Prior to exams, small credit unions are asked to fill out pages and pages of checklists, with hundreds of obscure regulatory items that usually don't even pertain to small credit unions (completely irrelevant). In addition, small CUs are supposed to provide (upload), exhaustive lists of documents and verifications, often for items the examiner may not even bother looking at (or they they request again because they didn't look). Who does all this work - the highest paid employee, the CEO (pulling them away from running the credit union for multiple days, before the exam even starts). We request a shortened list for small CUs, pertaining to areas of high significance that are relevant for small CUs.  

Are there other burdensome regulations, which seem to have little or no impact on your safety or soundness?  Let us know!