The National Association of Federally-Insured Credit Unions (NAFCU) backs an interim final rule from the Federal Reserve Board about temporary asset threshold relief for community financial institutions.
In a letter to the Federal Reserve Board, Andrew Morris, senior counsel for research and policy at NAFCU, said the interim final rule eases the transition to new regulatory standards for community institutions by adopting more flexible standards for measuring asset growth. He also provided several recommendations to clarify certain parts of the rule.
“To ensure that such relief reasonably reflects the magnitude of direct economic stimulus paid to individuals under the American Rescue Plan Act of 2021 and conforms to similar relief measures adopted by other banking regulators, we ask that the Board specify that for the purpose of Regulation II, asset growth in 2020 or 2021 will not trigger new regulatory requirements until July 1, 2023, at the earliest,” Morris wrote.
Credit unions have seen a large influx of deposits over the past year due to the pandemic. Thus, NAFCU has flagged concerns for credit unions approaching the $10 billion threshold. The loss of “small issuer” status under Regulation II could limit the availability of resources that might otherwise be available to them.
“The entire credit union industry has been working tirelessly to fuel the engine of economic recovery to help members who have lost jobs or experienced financial strains due to the pandemic,” Morris added. “The intensity of this member-focused activity coincides with an accelerated timeframe for adjusting to new, asset-based regulatory requirements. Recognizing the difficulty of these circumstances, the NCUA recently issued an interim final rule that addresses credit union specific asset threshold relief.”
The National Credit Union Administration’s rule allows federally-insured credit unions to use asset data from March 2020 to determine the applicability of regulatory thresholds for 2021 and 2022. Morris urged the Fed board to clarify that credit unions may use, through Dec. 31, 2021, asset data on either Dec. 31, 2019, or Dec. 31, 2020, whichever is lower, for purposes of determining the applicability of Regulation II’s requirements.
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