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An NCUA plan to exempt from agency operating fees those credit unions with up to $2 million in assets does not go far enough, the two national credit union trade groups said this week.
Instead, that threshold should be increased to $5 million, CUNA and NAFCU wrote, in commenting on the proposal.
“While the amount of the operating fee collected by FCUs between $1 million (or $2 million as proposed) and $5 million is relatively small in the aggregate, it accounts for real dollars that are diverted from serving the members of the nation’s smallest FCUs—a great many of which serve financially fragile consumers on the lowest rungs of the economic ladder,” wrote Luke Martone, CUNA’s senior director of advocacy and counsel.
“NAFCU believes that this threshold strikes the appropriate balance between offering meaningful relief to very small credit unions and ensuring that a fair portion of FCUs are covered,” Andrew Morris, the trade group’s senior counsel for research and policy, wrote, in a separate letter. “Furthermore, the amount forgone by raising the exemption threshold to $5 million represents a small share of total operating fees.”
Backstory and Context
In June, the NCUA board approved a plan to solicit comments on the agency’s operating fees, including how the agency could make the fee schedule less regressive.
The NCUA noted that the $1 million exemption level has been in place since 2012. At the same time, average asset sizes of federal credit unions have close to doubled, which led to the agency proposing an increase of the asset threshold to $2 million.
The agency also said that the current fee schedule allows credit unions with a larger amount of assets to pay a lower marginal rate than other credit unions.
“Given growth and consolidation in the credit union system, the board is interested in whether such an approach is an equitable method for allocating the operating fee,” the NCUA explained, in soliciting comments on the fee structure. The agency added that there is a wide range of approaches for calculating operating fees.
What Else Do the Letters Call For?
That range is part of the problem, according to the trade groups.
Martone asked the agency to revise its request for information by providing specific adjustments to the fee schedule and how they would affect fees paid by credit unions.
Morris wrote that NAFCU would like the NCUA to provide additional modeling of the financial impact changes to fees would have and to offset any redistribution of fees through cuts to the agency’s budget.
NCUA
