As Prepared for Delivery on January 27, 2022
Thank you for today’s presentation.
As I often say, my regulatory philosophy is that regulation should be effective and not excessive. In my view, this rule goes too far.
If succession planning is an issue for credit unions, let’s have more succession planning webinars, issue guidance letters to credit unions, and make it a more prominent tool in the regulatory toolbox. We currently include succession planning in our regulatory toolbox by including it in the Management competent of the CAMELS score. Indeed, I heard from a smaller credit union that was downgraded in their Management component of CAMELS for an inadequate succession plan. Maybe we should look at sharpening this tool that is already in the regulatory toolbox.
Further, I worry today’s proposed rule will be counter-productive, and it will produce the exact opposite result of its intended effect. The smallest credit unions are struggling to stay open, so today’s rule could actually accelerate mergers, in my view.
Shifting gears, Ariel, I do have a question: Can you confirm that the NCUA estimates this rule will take credit unions 30-minutes to create a succession plan for the first year under the guidelines laid forth by the Paperwork Reduction Act?
A succession plan that takes only 30-minutes to complete is either a check the box endeavor or a woefully underestimated regulatory burden.
I see the problem before us today regarding succession planning, like other problems facing the movement, as the need to have more effective governance by the members of credit unions. It’s up to the member-owners to address this issue and to know their rights, duties, and obligations in a transparent and clear way. It’s our responsibility to supervise these credit unions to keep the system safe and sound. It is not our responsibility to micromanage.
Ariel, I do have some final questions:
- What do our other peer regulators require regarding Succession Planning? In other words, do they approach this issue by guidance or by rulemaking?
- Thank you. And, Ariel, do we have a succession plan in effect for top NCUA leadership today.
Thank you. We do not have a succession plan in effect today. Again, for the reasons I articulated, I will be voting against this proposed rule.