January 24, 2022

NAFCU to NCUA: Give CUs flexibility in 2022-2026 strategic plan

NCUANAFCU Vice President of Regulatory Affairs Ann Kossachev last Friday wrote to the NCUA regarding its draft 2022-2026 strategic plan, which was approved by the NCUA Board in November of last year. Kossachev called on the NCUA to provide credit unions the necessary flexibility to adapt to new technologies and to take steps to reduce credit unions’ regulatory compliance burdens.

“NAFCU urges the NCUA to adjust its goals and objectives accordingly to ensure it aligns with the final budget, recognizes lessons learned from the COVID-19 pandemic, and maintains the efficient use of credit union dollars,” wrote Kossachev.

The NCUA Board recently set the Share Insurance Fund’s (SIF) normal operating level (NOL) at 1.33 percent in partial recognition of the credit union industry’s financial strength. NAFCU requested the Board to return the NOL to its historic level of 1.30 percent to “strike an appropriate balance” between protecting consumers against financial risks and allowing credit unions to access the funds they need to continue providing quality, affordable financial services to their members.

The association also thanked the NCUA for its decision to return any surplus from the Operating Fund back to credit unions and encouraged the agency to consistently evaluate the fund for any surpluses moving forward. Regarding examinations, NAFCU recognized that the NCUA’s Modern Examination Risk Identification Tool (MERIT) will help streamline examinations while reducing compliance burdens. The association also called on the agency to increase the exam flex cap to $3 billion to provide greater flexibility to credit unions and allow examiners to focus on more high risk institutions.

NAFCU also highlighted the risks and opportunities identified by the NCUA related to climate change, emerging financial technologies, and cybersecurity threats facing credit unions.

Of note, NAFCU also called on the NCUA to help bridge the financial gap by encouraging Congress to amend the Federal Credit Union Act to allow all credit unions to add underserved areas to their fields of memberships, along with streamlining the chartering process to establish new credit unions. The association also encouraged the agency to work with Congress and Treasury to improve the Community Development Financial Institution (CDFI) application process and the current application backlog.

NAFCU suggested broadening financial accessibility through revisiting “the service facilities rule to include ATMs as well as mobile and online banking services in the definition of service facility for the addition of underserved areas,” noted Kossachev.

In addition, NAFCU urged the NCUA to strengthen and diversify the agency’s workforce through improving technical skills and modernizing examinations. 

Read the full letter. NAFCU continues to engage with the NCUA to ensure credit union feedback is considered during this process.