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Washington (July 22, 2016) --National Association of Federal Credit Unions (NAFCU) President and CEO Dan Berger issued the following statement in conjunction with the submission of the association's comment letter to the National Credit Union Administration (NCUA) opposing the interagency proposed rule on incentive-based compensation (IBC) arrangements and urging its withdrawal.

"This is the latest example of a Dodd-Frank rule beingunnecessarily applied to credit unions. It is widely-acknowledged, credit unions neither caused the financial crisis, nor used any of the risk-inducing IBC arrangements contemplated by this rule," said Berger. "Unfortunately, as we have seen time-and-time again, credit unions are being punished for the bad actions of Wall Street and big banks. NCUA and the other federal banking agencies should exempt credit unions from this rule."

In the association's eight-page comment letter,Berger advocated that NCUA issue guidance covering IBC arrangements rather than additional regulations, which will only increase credit union compliance costs and further confer a competitive advantage to big banks that can afford such burdens. If the agency moves forward with a rule, Berger urged NCUA to revise the rule so that requirements are based on actual risks present, not on a credit union's asset size.

Specifically, he wrote, "NAFCU believes the agencies have discretion to correlate differing standards for individual credit unions based on the inherent risk related to a credit union's practices and products, rather than depend on a credit union's asset size. Instead, NAFCU and our members advocate that this proposal should be tailored to specific issues and implemented on a case by case basis, depending on the risk profile of the individual credit union."

Berger also recommended that NCUA consider the unique business model of credit unions, such as the volunteer nature of credit union boards.

"These [provisions] are complicated matters even for a paid or professional board," said Berger. "As a result of these requirements, this rule will become untenable for credit union boards unless an exception or provision is provided that considers their volunteer nature."

The proposed IBC rule prohibits features of IBC arrangements that encourage inappropriate risks, and sets out minimum standards of governance and disclosures. This rule would not require a credit union to report the actual amount of compensation, fees, or benefits of individual covered persons as part of the disclosure and recordkeeping requirements. It only covers credit unions with assets greater than $1 billion.

The National Association of Federal Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation's federally insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance.www.nafcu.org.

Patty Briotta
Director of Public Relations
Office:703-842-2820
pbriotta@nafcu.org