COMMENT CALL: The NCUA has proposed a rule that would require the boards of directors at all federally insured credit unions (FICUs) to establish and follow a succession plan. This rule would apply to all Wisconsin credit unions, regardless of size, whether federally or state chartered.
The League is asking Wisconsin credit unions to join us in voicing your opposition to this rule, and we want to share a sample comment letter template you can consider using.
What the proposal would require
For details about the NCUA’s proposal, see this League Comment Call from August. Here are some of the key requirements the new rule would impose:
- It would require FICUs to establish a written succession plan for certain positions, including members of the board and supervisory committee, as well as management and assistant management officials, senior executive officers, and members of the credit committee and loan officers when they are involved daily in reviewing loans.
- The plan would need to identify the title of the incumbent of each covered position, an anticipated vacancy date, and the credit union’s general plan or strategy for temporarily and permanently filling positions, including vacancies due to unexpected circumstances.
- The board of directors would have to review the succession plan at least once a year.
Why The League opposes the rule
Succession planning is undoubtedly important, but The League sees this proposal as an example of government overreach. Based on the feedback we’ve received, credit unions in Wisconsin (and around the nation) feel the same way.
We have several issues with the NCUA’s proposal, including these:
- This new proposed rule modifies a 2022 NCUA proposal, which would have applied only to federal credit unions, not state-chartered FICUs. Credit unions across the country overwhelmingly opposed the rule in 2022. Unfortunately, the NCUA did not heed industry-wide concerns. Instead, it has now issued a revised proposal that expands on the 2022 plan. The new version is significantly more prescriptive and would create excessive new regulatory hurdles. This added red tape would impact credit unions of every asset size but especially smaller institutions.
- The NCUA anticipates that credit unions will spend nearly 47,000 hours complying with this rule or about 10 hours a year for each credit union. We think that number substantially underestimates the true amount of time credit unions will need to develop a robust and complete succession plan.
- No other banking regulator has issued formal rules on succession planning. Other agencies have chosen to provide guidance for the financial institutions they govern, respecting the essential role that a board of directors plays.
Let the NCUA know what you think by Monday, Sept. 23
The League will submit a comment letter, asking the NCUA to issue guidance, not a prescriptive rule, on succession planning.
Individuals and credit unions are free to comment, as well. If you’d like to do so, please consider basing your letter on this sample template that opposes the rule. The letter is meant to be tailored to your needs and can be edited to your liking. It was created by the American Association of Credit Union Leagues’ Regulatory & Legal Strategy Work Group Task Force on Succession Planning.
Comments are due by 11:59 PM EDT on Monday, September 23, 2024.
To submit your comment to the NCUA, visit this Federal Register page, and click “Submit a formal comment.” Users can copy/paste comments or upload their letter as a document.
Please let The League know if your credit union submits a comment.
We urge you to make your voice heard and demonstrate to the NCUA that credit unions stand united against an unnecessary new rule.