As Prepared for Delivery on June 22, 2023
Thank you, Melissa, and Trey, for your presentation.
Since 2012, federal credit unions with average assets of $1 million or less during the preceding four quarters have been exempt from paying an operating fee. Over the last eleven years, the average assets of federal credit unions have approximately doubled. Raising the fee exemption level from $1 million to $2 million in average assets makes sense.
I appreciate the proposal to exclude certain assets from the base used to compute the operating fees. Currently, the fee charged to a federal credit union whose average assets are $1,000,001 is $164 – up from $0 when the same credit union had assets of $999,999. That’s a marginal tax rate of nearly 6,000 percent. The new methodology is akin to the standard deduction in the tax code, which everyone gets an amount of tax-free income and then only pays taxes starting at the first dollar above the set amount.
In my over two years on this Board, I’ve been struck by the burden on small credit unions to keep their doors open. Unfortunately, the burden is like a death from a thousand cuts – there is no magic bullet. It’s not the small fee, it’s all the small fees to lots of people, not just to the NCUA.
It’s not a single one-page form for compliance, it’s all the one-page forms. The proposed methodology to exclude certain assets and the proposed changes to the exemption levels are a move in the right direction. We must start somewhere. The goal here isn’t just to cut down on payments to the NCUA, it’s to cut down on someone’s to-do list. It’s to cut down on stress.
Thus, I have a couple of questions.