Nussle: To slow the growing number of mergers, Congress must address regulatory burden
“We have seen the number of mergers rise in recent years as the regulatory burden on community institutions has skyrocketed. Quite simply, it is getting harder to survive as a community financial institution due to these burdens,” America’s Credit Unions President/CEO Jim Nussle wrote in a letter to the House Financial Services Subcommittee on Financial Institutions.
The letter, sent ahead of the Subcommittee’s hearing on bank mergers and de novo formation, outlined America’s Credit Unions’ recommendations to reform federal banking agency merger policies as well as specific solutions to issues de novo credit unions face.
Nussle explained that an increase in mergers by community institutions came as a result of regulatory burden. He stressed that any effort to remedy what is happening on the merger front must focus on providing regulatory burden relief to community financial institutions.
Nussle urged the subcommittee to also keep credit unions in mind while they are examining challenges faced by de novo banks, as there are “similar challenges facing de novo credit unions and potential solutions to help them too.” He outlined three specific solutions:
- Fix the size of new credit unions. To facilitate the successful chartering of new credit unions, apply more flexible Prompt Corrective Action net worth standards for that entity’s first year of operation.
- Increase the threshold for Select Employee Groups. The current NCUA threshold of 3,000 members to determine whether a simplified application process is allowed is outdated and no longer reflects the growth of the credit union industry. Increasing this threshold would positively contribute to the formation of de novo credit unions.
- Allow provisional charters. The NCUA’s provisional charter program provides organizers with approximately one year to obtain startup capital and has been relatively successful. America’s Credit Unions asks the subcommittee to permanently authorize this provision charter program.