Credit unions could have up to $100 million in assets and still be considered small enough for regulatory relief in future rulemakings. That's 10 times more than the asset threshold of $10 million which was in place when I became NCUA Chairman.

Even more relief is on the way—for credit unions of all sizes. We are exploring five new areas of regulatory relief to help credit unions compete in the rapidly evolving marketplace.

Counting Supplemental Capital

I have already heard many comments about supplemental capital. Commenters suggest that under current law, the NCUA could count certain forms of debt as supplemental capital for the risk-based capital ratio.

For example, subordinated debt could be issued to members and non-members, but it would be uninsured. This would require additional rule changes beyond risk-based capital.

To implement these changes, we would need to do three things:

1. Provide consumer protections.

2. Change the order of Share Insurance Fund payouts, to recognize that supplemental capital accounts are not insured.

3. Set prudent standards for credit unions to offer subordinated debt to supplement their risk-based capital. This includes setting minimum redemption periods to ensure the capital is available to cover losses during times of stress.

I understand the need for supplemental capital in certain circumstances. And I am committed to allowing supplemental capital to be counted as part of modernizing risk-based capital.

So, I am open to proposing the rules necessary to accommodate forms of supplemental capital permitted by law. The effective dates would coincide with the implementation of the risk-based capital rule in 2019.

But not everyone should have to wait until 2019 to benefit from regulatory changes on supplemental capital. That's why I've assembled an internal working group to focus on low-income credit unions that can already raise and count secondary capital.

The primary goal of this working group is to explore ways to increase access to secondary capital for low-income credit unions – this year. This could include regulatory relief to make secondary capital more attractive to investors in low-income credit unions with either a federal or state charter. In addition, the group will discuss potential legislative and regulatory changes that could benefit all credit unions interested in raising supplemental capital.

Not surprisingly, there has been a lot of interest in this working group. To make sure the discussions are inclusive and cost-effective, the group plans to hold a series of telephone conversations with stakeholders around the country, starting this month.

Now, let me be clear: The NCUA can allow certain forms of supplemental capital for both risk-based capital and low-income credit unions. But for credit unions without a low-income designation, new legislation is required to allow supplemental capital to count toward the 7 percent net worth leverage ratio.

So, I continue to support the bi-partisan supplemental capital legislation that Rep. Peter King (R-N.Y.) and Rep. Brad Sherman (D-Calif.) recently re-introduced.

Expanding Fields of Membership

We're looking for ways to expand field of membership options even further this year.

Last year, we proposed a rule designating seven categories of associations that federal credit unions could automatically add to their fields of membership.

This year, we would like to add even more automatic qualifiers. It's our intent that down the road, you won't be required to get approval from the NCUA each and every time a legitimate association comes to your door.

Additionally, I've created a working group to recommend options for more inclusive fields of membership. This working group will identify obstacles facing credit unions looking to expand. The group will recommend rule changes to provide more flexibility to federal credit unions.

Our goal is to make it easier for federal credit unions to expand their membership base under the Credit Union Membership Access Act.

And we're not waiting for Congress to act. We're going to move forward with sensible rule changes within NCUA's legal authority.

Of course, easing some other field of membership restrictions would require congressional action. Last month, NCUA testified in support of several legislative changes aimed at regulatory relief.

One that I want to highlight is our effort to allow community-chartered credit unions to add underserved areas. This change would be a win-win. It would help federal credit unions increase membership, while providing access to affordable financial services for the unbanked.

Removing the Fixed Assets Limit

In addition to field of membership flexibility, we will soon provide more discretion for federal credit unions to manage fixed assets.

We realize that an over-concentration in fixed assets is dangerous. Credit unions should prudently and deliberately make decisions about the requisite level of fixed assets to hold.

But, credit unions should be able to do that without needless red tape. I don't believe that spending hours putting together waiver applications is a good use of credit union staff time. Decisions to upgrade technology, or facilities, or other fixed assets should be made by each credit union – not the NCUA.

Our forthcoming rule would effectively eliminate the 5 percent cap on fixed assets. The new proposal will authorize federal credit unions to set their own prudent limits on fixed assets such as computers and buildings.

I have asked NCUA staff to present this new proposed rule at our open board meeting on March 19.

Permitting Asset Securitization

As the credit union system grows in size and complexity, many credit unions have begun adopting more sophisticated financial innovations.

We intend to allow qualified credit unions to securitize their own assets.

Securitization has the potential to allow large-scale credit unions to tap new sources of liquidity and reduce interest rate risk by converting fixed-rate assets into cash.

We're fine-tuning our proposed rule on asset securitization and hope to finalize it later this year.

Easing Member Business Lending

I have heard loud and clear from credit unions that make business loans: Requiring a personal guarantee on every business loan can be frustrating and can lose business.

That's why we plan to eliminate the waiver process altogether.

Determining whether to exempt a borrower from a personal guarantee is something that credit union loan officers should be empowered to do, based on prudent underwriting criteria.

So, we are going to move away from defining highly prescriptive, one-size-fits-all business loan underwriting requirements.

The bottom line is: Credit unions know their members' needs better than the NCUA does. Our business lending rules need to reflect that fact. We will continue to provide business loan guidance and supervise effectively.

In response to credit union leaders from the Dakota states, who gave me thoughtful and compelling feedback, we intend to lift unnecessary limits on construction and development loans.

As I've said before, the NCUA is not here to hold credit unions back. We are here to protect the system so credit unions can serve their members.

We're always open to new ideas. We will listen, and where sensible, we will act. I think we've proven that time and again.

Debbie Matz is chairman of the NCUA. She can be reached at 703-518-6301 or [email protected].