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NAFCU asked NCUA Chairman J. Mark McWatters to evaluate the work of other federal financial regulators regarding capital requirements and measuring risk to see if the agency should undertake similar efforts in a letter Wednesday. The letter specifically requested that the agency reassess regulations tied to a credit union's asset size.

NAFCU President and CEO Dan Berger told McWatters that the association and its members appreciate the efforts the NCUA has already taken to loosen the regulatory burden on credit unions and offered ways the agency could continue on that path.

He pointed to a joint proposal issued in September by the Office of the Comptroller of the Currency, the FDIC and the Federal Reserve aimed at reducing regulatory burden by simplifying capital rules. He said the proposal, in part, would simplify the threshold deduction for mortgage servicing assets (MSA). Berger wrote that while credit unions are prohibited from purchasing MSAs, "NAFCU believes the agency could take comparable measures to ease regulatory requirements, such as a reduced risk-weighting …"

On the topic of measuring risk, Berger pointed to an Office of Financial Research report released last week that supports NAFCU's long-held stance that the size of a financial institution does not equate to risk. Instead, the report found that "a multi-factor test that examines the nature and activities of the institution is a better indicator of risk," he wrote.

Based on this study, he encouraged the NCUA in his letter to "reassess its method of how credit unions are provided the benefits of regulatory relief" since the agency has numerous regulations with varying requirements based on a credit union's asset size. "Simply put," he explained, "an 18-month exam cycle and streamlined capital requirements should be available to all well-run, low-risk credit unions – regardless of asset size."