Small CUs To NCUA: Tailor Supervision Or Risk Losing Community Institutions
By CU Today Staff —
KENNEWICK, Wash. — A coalition representing small credit unions is pressing NCUA to go further in tailoring supervision and regulatory relief, arguing that examiner pressure — not just formal rules — is threatening the survival of smaller institutions.
In a Feb. 19 letter to the agency following its 2026 Supervisory Priorities webinar, Doug Wadsworth, president of Tri-Cities Community FCU and president of the Endangered Small CU Defense (ESCUD), said small credit unions applaud recent deregulation steps but are seeking additional relief tied directly to examinations, BSA enforcement, CECL compliance and the agency’s broader Deregulatory Project
ESCUD formally represents 27 small credit unions and says more than 150 additional institutions follow its advocacy efforts.
Wadsworth noted that a recent ESCUD survey of mostly sub-$100 million credit unions found regulatory burden ranked as the second-largest challenge to financial health, behind only competitive loan growth.
The survey also identified examiner “over-compliance pressure” and “examination exhaustion” as major pain points.
Among the group’s specific requests:
Longer Exam Cycles for Well-Run CUsWadsworth asked NCUA to extend examination schedules for small credit unions that consistently earn CAMEL 1 or 2 ratings, arguing that healthy institutions pose minimal risk to the NCUSIF and should not face the same frequency of review
He suggested limiting exams to one examiner when possible and narrowing scope to high-impact safety-and-soundness areas.
Restraint on DORsThe letter calls on NCUA to curb the use or threat of Documents of Resolution (DORs) for minor, first-time findings that are not urgent or safety-related
Wadsworth contended that threatening DORs over low-impact issues amounts to “regulation by enforcement,” creates friction with examiners and discourages small credit unions from pushing back for fear of retaliation.
Reduced BSA Pressure for Minor ErrorsESCUD urged NCUA to direct examiners to distinguish between systemic BSA weaknesses and trivial or non-recurring errors, saying even minor mistakes can trigger DOR threats
Expanded CECL ReliefWadsworth also asked the agency to reconsider the $10-million asset threshold tied to CECL expectations, arguing that small institutions above that level gain “zero benefit” from the methodology and incur added cost and administrative burden
He proposed allowing smaller credit unions to continue using the historical loss method.
While praising NCUA’s move to eliminate “regulation by enforcement,” remove reputational risk from exams and shorten exam preparation requirements, Wadsworth said only limited relief so far has been specifically targeted to small credit unions. He urged the agency to pursue additional proposals tailored to the sector’s unique constraints.
“Every little bit helps,” Wadsworth wrote, but emphasized that meaningful supervisory flexibility — particularly in examination approach — is critical to ensuring small credit unions remain viable.
Originally reported by CU Today.