The major assets prohibition threshold for credit union management interlocks would be raised to $10 billion – a four-fold increase from the current threshold of $2.5 billion, and matching that of bank regulations – under the latest “deregulation” proposal issued Wednesday by the federal credit union regulator.
Calling it an “obsolete regulation,” the National Credit Union Administration (NCUA) said the proposal – part of its 11th round of proposed regulatory changes in its “deregulation project” – would raise the prohibition threshold mandated under the Depository Institution Management Interlocks Act (DIMIA).
The legislation, enacted in 1978, restricts management officials (directors, trustees, officers) from serving simultaneously at two unaffiliated depository organizations if they are in the same community or if either hold assets above certain thresholds.
Federal banking regulators in 2019 raised the threshold to $10 billion for the institutions they supervised, saying then that the increase would account for changes in the market since the latest thresholds were adopted in 1996. The credit union regulator’s proposal essentially brings the agency in line with the other regulators.
NCUA noted that the DIMIA gives regulators the power may adjust, by regulation, the major assets prohibition thresholds to allow for inflation or market changes.
In addition to the threshold change, the agency said it is also proposing to remove a rule provision which outlines instances in which it would “presume that an interlock would not result in a monopoly or substantial lessening of competition for institutions.”
Comments are due on the proposal July 6.
Also, as part of its latest proposals, NCUA said it wants to remove sections in its rules that “primarily” refer federally insured state-chartered credit unions (FISCUs) to other NCUA regulations. The agency said the changes are intended to reduce duplication.
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