COMMENT CALL: The National Credit Union Administration (NCUA) today announced the fourth round of proposed regulatory changes associated with NCUA’s Deregulation Project. The project is an ongoing review of NCUA’s regulations to ensure they are focused on credit unions’ safety, soundness, and resilience. (This Comment Call addressed rounds one and two, and this Comment Call addressed round three.)
With today’s announcement, NCUA is requesting comments on four new proposals that would clarify agency guidance or eliminate unduly burdensome or duplicative requirements. The four proposals are summarized below.
Round Four
- Changes for public unit and non-member shares. The NCUA is proposing to remove the provision requiring a credit union board to develop a written plan on the intended use of public unit and non-member shares if those funds, along with any borrowings, would exceed 70% of paid-in unimpaired capital and surplus.
Impact on credit unions: The change would give federally insured credit union (FICU) boards the option of developing their own policies for managing public unit and non-member shares within existing aggregate limits, allowing credit union boards to manage their funding sources and reliance on these funds with greater flexibility.
- Notice of termination of excess insurance coverage. The NCUA is proposing to eliminate §741.5 of its regulations, which requires a FICU with share insurance coverage that supplements the coverage provided by the National Credit Union Share Insurance fund to give its members a 30-day notification if it plans to end its supplemental coverage.
Impact on credit unions: This change would only require a credit union to notify its members if it terminates previously held supplemental share insurance coverage. The specific 30-day timeframe for notification would no longer be required.
- Maximum borrowing authority. The NCUA is proposing to remove the maximum borrowing authority from the NCUA’s regulations that establish the requirements for obtaining and maintaining federal share insurance with the Share Insurance Fund. This provision applies to all FICUs.
Impact on credit unions: This change would eliminate the borrowing limit that currently applies to federally insured state chartered credit unions (FISCUs). FISCUs would be subject to any applicable state law requirement. The statutory limit on federal credit union (FCU) borrowing would still apply.
- Disclosure of share insurance. The NCUA is proposing to eliminate §741.10 of its regulations. Under the current regulation, all FISCUs that are permitted by state law to accept non-member shares or deposits must identify such accounts on all required reports and notify all non-member account holders in writing that their accounts are not insured by the Share Insurance Fund. The NCUA is proposing to remove this section because it duplicates the disclosures FISCUs are already required to make as part of their agreement for maintaining federal share insurance.
Impact on credit unions: This proposed removal would eliminate an unnecessary and redundant requirement.
Make your voice heard
The League may comment on these proposals, depending on the feedback we receive from Wisconsin’s credit unions. Please email Paul Guttormsson with your thoughts on this round of NCUA regulatory relief proposals by March 23, so that our comment letter (which is due March 30) can reflect your positions.
Compliance Roundtable – February 18 (Webinar)
Join a member of The League’s compliance team as they lead a discussion on the latest changes in regulations and need to know information to keep your credit union in compliance. You can find more information or register on our website.