Small Credit Unions Gain Ground In Push For Smarter Examinations
By CU Today Staff —
KENNEWICK, Wash.--The Endangered Small Credit Union Defense (ESCUD) is urging the Federal Financial Institutions Examination Council to finalize proposed changes to the CAMELS rating system, calling the revisions a practical step toward more proportionate supervision of the nation’s smallest credit unions.
In a July 16, 2026 letter, ESCUD—representing institutions under $500 million in assets—endorsed the proposal’s emphasis on material financial risks, the removal of special weighting for the Management component, narrower Management evaluation criteria, and a clearer materiality threshold for adverse ratings.
For small credit unions, the current system often translates into lengthy exams, subjective findings, and pressure to over-document low-risk areas, the group said. ESCUD’s surveys of CEOs at institutions mostly under $100 million repeatedly place examination exhaustion and over-compliance pressure near the top of operational challenges, alongside CECL and BSA requirements.
“These changes would allow healthy small credit unions to spend less time dealing with non-material issues and more time serving their members,” said Doug Wadsworth, ESCUD president and president of Tri-CU Credit Union here, who noted ESCUD is aligned with America's Credit Unions on the matter.
The letter aligns with ESCUD’s ongoing advocacy for targeted regulatory relief, including recent NCUA actions on vital records preservation, reputation risk, and supervisory committee rules. The organization continues to press for meaningful progress on CECL, NMLS, HMDA, and BSA burdens that fall hardest on lean, community-focused institutions.
ESCUD asked the FFIEC to adopt the revisions as proposed or strengthen them further in the direction of true risk-based supervision. The group argues that preserving small, hyper-local credit unions strengthens the entire cooperative system without compromising safety and soundness.
For more information, visit www.EndangeredSmallCUDefense.org or contact Doug Wadsworth at Doug@Tri-CU.com / 509-735-8331.
Originally reported by CU Today.