Rule on ‘small entity’ threshold
notes NASCUS recommendation
SEPT. 17, 2015 -- A “small entity” will now be one with $100 million or less in assets under the Regulatory Flexibility Act (RFA), the NCUA Board voted today in issuing a final rule amending an Interpretive Ruling and Policy Statement (IRPS), and noting a NASCUS recommendation for the final rule.
According to the agency, the asset threshold increase – up from $50 million – “provides transparent consideration of regulatory relief for a greater number of credit unions in future rulemakings.”
The board voted, 3-0, during its regular monthly meeting in Alexandria, Va., for September.
In its comment letter in May, NASCUS recommended that NCUA revisit current rules containing asset thresholds to evaluate the substitution of the small credit union definition for the articulated asset size in those rules. NASCUS made that recommendation after noting that the association supports raising the regulatory threshold that defines a small credit union pursuant to the RFA – but also noted that the RFA classification as a small credit union does not directly convey any immediate regulatory relief to credit unions.
“While NCUA has, commendably, taken steps to bifurcate the application of recent final rules by asset size risk analysis, none of those rules incorporate the definition of small credit union in the rule. Rather, those rules specifically cite an asset threshold, generally $50 million,” NASCUS wrote.
NCUA stated, in its analysis, that it will separately consider whether to align thresholds in existing rules, such as those applying interest rate risk and liquidity requirements, with the RFA threshold. “The NCUA’s regular three-year review cycle provides appropriate opportunities for these considerations,” the agency stated. “Individual reviews will facilitate transparent considerations of unique risks and compliance burdens specific to those rules, rather than encouraging a one-size-fits-all approach.”
NCUA also noted in its analysis of the final rule that:
- The total number of federally insured credit unions covered by the RFA under the $100 million threshold will increase to approximately 4,690 (up from 3,957);
- That represents 75.6% of FICUs, which hold 10% of FICU assets;
- Between 2001 and 2014, FICUs with less than $100 million in assets accounted for 32% of “industry losses.” FICUs with less than $250 million accounted for 63% of losses – and those with less than $550 million for 97%.
(For both, refer to "Definition of small credit union")