NEWS: Today, The League filed a comment letter on behalf of Wisconsin’s credit unions, letting the agency know that we oppose their plan to require all federally insured credit union’s (FICU’s) boards to adopt detailed, written succession plans.
“We understand the importance of succession planning, and we share the agency’s concerns that succession planning failures can be a factor in credit union mergers and consolidations,” we wrote. “But this prescriptive rule is the wrong solution.” We asked the NCUA to issue succession planning guidance instead, “not more prescriptive and burdensome rulemaking.”
The League told the NCUA that we have several objections to its proposal:
- The rule could drive more credit unions to merge, the opposite of what the NCUA said that it wants. “Our credit unions have told us repeatedly that keeping up with the avalanche of new and changing federal regulations in recent years has led many of their counterparts to seek merger partners,” we wrote. “By adopting these prescriptive succession planning rules, the NCUA would only add to FICUs’ already heavy regulatory burden, with the unintended consequence of accelerating the consolidation trends that the NCUA says it wants to avoid.”
- The rule would impermissibly intrude on credit unions’ internal affairs. It is an example of regulatory overreach. A credit union’s board should have the final say on its succession plan – not the NCUA. One of our credit union CEOs put it bluntly, and we shared their quote: “This proposed rule is regulatory overreach in its most pure form. I am opposed to it and find it to be unnecessary and none of their business.”
- Other federal financial regulators, like the Office of the Comptroller of the Currency, have offered guidance, not rulemaking, on succession planning. Furthermore, their guidance is limited in scope and is designed to avoid over-burdening boards. That is a critical concern because credit union directors are volunteers with many other duties to fulfill.
- The proposal is far too broad, covering a laundry list of positions, including directors and supervisory committee members, not just key management officials. It should be pared back to address only truly critical positions.
- Issuing guidance instead of a strict rule would still allow NCUA examiners to address succession planning as part of their CAMELS rating system.
- The NCUA has underestimated the real number of hours credit union boards would need to comply with this rule.
You can still tell the NCUA what you think
The deadline for filing comments on the NCUA’s succession planning proposed rule does not end until Monday, Sept. 23, at 11:59 p.m. EDT. Your credit union is welcome to share its opinions directly with the NCUA. The League has provided a sample comment letter template that you can consider using. The letter is meant to be tailored to your needs and can be edited to your liking. This recent Comment Call has more information, including instructions for filing comments.