The National Credit Union Administration is moving forward with a proposed rule for succession planning to address the aging population of credit union CEOs.
At the NCUA’s monthly board meeting Thursday, Todd Harper, the agency's chairman, and other top regulators voted 2-1 to advance a rule to mandate that federal credit unions develop and follow processes for succession planning.
With many credit union leaders
“We are losing credit unions much faster than we can replace them with new charters, and we must find a way to keep small credit unions viable over the long term,” Harper said.
Trade groups such as the Credit Union National Association and the National Association of Federally-Insured Credit Unions are gathering feedback from member institutions about the regulator’s efforts to enforce succession planning.
Ann Kossachev, vice president of regulatory affairs for NAFCU, expressed concern over the burden that would be placed on small credit unions.
Small credit unions "may only have a few staff members in total … it takes time and energy to plan all of these things out and [that] time and resources could be better spent serving their communities,” Kossachev said. “We want smaller institutions to be successful and to thrive, but how burdensome is a rulemaking going to be with a specific effective date and compliance deadlines versus additional tools and guidance that will help them to reach the same outcome.”
Luke Martone, director of advocacy and counsel for CUNA, said that both regulations and guidance have their advantages and disadvantages.
"Other federal financial regulators have addressed succession planning through various guidance and letters to their institutions as opposed to actual regulatory requirements in their rules … so that may be more appropriate," Martone said.
Aiming to ease the burden placed on small credit unions, the NCUA offers online training on succession planning and recommends that those with low-income designations “apply for technical assistance grants to support succession planning and offset the cost through the Community Development Revolving Loan fund,” said Ariel Pereira, senior attorney in the office of general counsel at the agency.
Upon the proposal's publication in the Federal Register, the NCUA will open the public comment period for 60 days before rendering a final decision.
“We are asking for stakeholder input on the burden of the rule and welcome suggestions for less burdensome alternatives,” said Kyle Hauptman, vice chairman of the NCUA.
