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NAFCU Senior Regulatory Affairs Counsel Michael Emancipator in a letter yesterday outlined ways in which the NCUA could strengthen its regulatory reform efforts, including by reprioritizing some items and considering alternative criteria for credit unions to qualify for relief.

Emancipator was responding to the agency's request for comment on a report from the NCUA's Regulatory Task Force that detailed the agency's priorities and timeframe for long-term regulatory relief.

In the letter, Emancipator commended the NCUA Board's "commitment to creating a regulatory environment that is safe and sound, yet still enables credit unions to become an even better service provider for the American consumer," and he offered additional ways to decrease the regulatory burden credit unions face.

One of these would be to stop using an institution's asset size to determine its risk to the market. Emancipator reiterated NAFCU's long-held view that "size does not equal risk," and that view is supported by a recent Office of Financial Research report titled, "Size Alone is not Sufficient to Identify Systemically Important Banks."

"While NAFCU appreciates that NCUA's various asset threshold requirements are intended to provide regulatory relief, we stress that the agency should not hinge its determinations on the asset size of the credit union … NAFCU respectfully asks the agency to more closely consider criteria by which a credit union should achieve relief, rather than prohibit relief merely due to asset size," Emancipator wrote.

Emancipator, with input from NAFCU's Regulatory Affairs Committee, also recommended the board reprioritize relief efforts based on a taxonomic system, with Tier 1, Class A regulations at the highest priority followed by Tier 1, Class B rules and so forth.

"Under this more nuanced system, credit unions will have greater assurance that the regulatory reforms that mean most to them will be pursued first," Emancipator noted.

The NCUA Regulatory Task Force was created in response to President Donald Trump's executive order requiring certain federal agencies to evaluate and identify existing regulations that should be repealed, replaced or modified. Though the NCUA does not fall under the executive order's scope, the agency is following the spirit of the order.

To read Emancipator's full letter of recommendations, click here.