WASHINGTON—NCUA Director of Examinations and Insurance Larry Fazio testified before Congress today urging legislators consider supporting several NCUA-backed bills that would ease regulation and provide increased flexibility for financial institutions, pointing to the regulatory burden faced by credit unions today, more than three quarters of which have assets of less than $100 million.
Fazio testified before the House Financial Institutions and Consumer Credit Subcommittee, noting that credit unions-and in particular small CUs-"generally have fewer resources available to respond to marketplace, technological, legislative and regulatory changes. NCUA recognizes this and acts continually to fine-tune our rules to remove any unnecessary burden on credit unions whenever that does not compromise safety and soundness."
Fazio recommended that legislators provide regulatory bodies with rulemaking flexibility that allows them to scale rules based upon an institution's size and complexity. He praised lawmakers' efforts in recent years for passing IOLTA laws and allowing federally insured CUs to offer prize-linked savings accounts.
Among the bills Fazio urged lawmakers to support-and supported by NCUA, are measures that would allow healthy credit unions to issue supplemental capital that would count as net worth (H.R. 989); bills to modify the MBL cap (H.R. 1188); and a bill that would provide parity between banks and CUs on the treatment of one- to four-unit non-owner-occupied residential loans by exempting them from the MBL cap (H.R. 1422).
Fazio added that the regulator would also support legislation permitting all FCUs to expand their membership by adding underserved areas, and legislation allowing NCUA to examine third-party vendors, which he said would provide CUs with additional reg relief and could save NCUA and credit unions time by eliminating the need to examine and mitigate the same issues during exams at each multiple institutions.
Fazio also took a moment to highlight NCUA's own reg relief efforts, pointing to its recently proposed rule lifting the asset ceiling for "small" credit unions from $50 million to $100 million. He also reminded subcommittee members about the regulator's Regulatory Modernization Intiative, which works to cut red tape at CUs of all sizes.
"NCUA employs a variety of targeted strategies to protect the safety and soundness of credit unions, members' savings, the Share Insurance Fund, and taxpayers," Fazio said. "We strive to balance maintaining prudential standards with minimizing regulatory burden."