In response to the NCUA’s request for comment on the simplification of the Succession Planning Rule as well as the Share Insurance Rule, America’s Credit Unions submitted a letter calling for the agency to rescind the former altogether. In the letter, America’s Credit Unions called the rule “an unworkable one-size-fits-all approach that is of no benefit to some credit unions while potentially detrimental to others.”
The final rule, which passed at the end of last year, would require credit union boards to establish written succession plans for specific roles, regularly review the plans, and ensure newly-appointed board members have a working knowledge of the plans within six months of their start date. The rule was intended to slow down the rate of credit union mergers occurring as a result of poor or nonexistent succession plans, as well as prepare credit unions for the ongoing retirements of the Baby Boomer generation.
While America’s Credit Unions attests that it understands the importance of succession planning in maintaining the viability of the credit union, it is against required regulatory enforcement on the topic that would place undue compliance burdens on those credit unions. Instead, it argues that the NCUA should merely offer guidance and practical support for credit unions.
“While succession planning is a helpful tool, we disagree with the NCUA as to its efficacy in preserving small credit unions, due in part to the fact that a lack of succession planning is not shown to be the catalyst for most small credit union mergers. It is critical that the NCUA revisit this regulation to avoid inappropriate micromanagement of credit unions, which require sufficient flexibility and autonomy to operate successfully,” the letter states.
Furthermore, the letter went on to suggest that the NCUA board rescind and then repropose the rule without the mandatory approach, claiming it would better align with the current administration’s deregulation goals and the executive orders issued to that end. The request for comment on the rules, through which ACU submitted this letter, was also intended to help the organization meet the new requirements set out by the administration in January.
NCUA Chairman Kyle Hauptman has historically opposed the succession planning requirement and even voted against it at the July 2024 board meeting. Though Hauptman continued to express doubts on the rule and the impact it would have—particularly on smaller credit unions— he eventually went on to vote in favor of the rule at the December board meeting later that year. It was set to go into effect in January of 2026.
As Hauptman currently operates as the sole board member of the NCUA, he could use the opportunity to attempt to make changes to the rule or rescind and repropose, as America’s Credit Unions suggests the chairman do. Though with former NCUA board members Todd Harper and Tanya Otsuka’s lawsuit still underway, such changes could eventually be deemed null and void should they win their case and be reinstated to the board.
On June 23rd, Harper and Otsuka filed a Joint Status Report requesting the U.S. District Court for the District of Columbia to rule on the case before the upcoming NCUA board meeting on July 24th. Should the court comply, the fate of the NCUA board could be decided before it reconvenes a month from today. Either Hauptman will be able to act as a quorum and make decisions unilaterally on behalf of the board, or the NCUA will have a three-member board once more.
Ultimately, whether or not the NCUA changes, rescinds, and/or reproposes the rule will most likely be influenced by the state of the board come July. Until then, all eyes are on the court, awaiting its ruling.
