NEWS: Yesterday, The League submitted six comment letters to the NCUA, telling them that we back each of the proposed regulatory changes in Round 6 of their Deregulation Project:
- We commented in support of an NCUA proposal to remove the requirement that each director of a federal credit union (FCU) or a federally insured, state-chartered credit unions (FISCU) must have a working familiarity with finance and accounting within 6 months after election or appointment.
Our letter shared this comment from one of our credit unions: “Eliminating this requirement meaningfully reduces the compliance burden on volunteer boards, particularly for smaller or mid-sized institutions where board members often serve without prior industry experience. While director competency in financial matters is unquestionably important, the specific six-month mandate imposes a rigid timeline rather than allowing credit unions to tailor training to the individual’s background, the board’s needs, or the credit union’s risk profile.”
We also pointed out a potential unintended consequence of the proposal, which would inadvertently impose a different requirement on FISCUs. We asked the NCUA to modify its language to avoid this result.
- We wrote in favor of an NCUA proposal to amend its blanket prohibition on the direct or indirect receipt of any commission, fee, or other compensation by a FICU official, employee, or their immediate family members, in connection with any loan made by their FICU.
The proposal would provide clearer and more flexible standards and permit incentives and bonuses to employees, including senior management, to incorporate lending metrics as part of compensation based on a credit union’s overall financial performance.
We were able to share comments from one Wisconsin credit union, which wrote to us to say that, “Clearer regulatory standards directly benefit institutions like ours by reducing uncertainty, improving compliance consistency, and ensuring a level playing field across the industry. … Allowing lending metrics to be incorporated into compensation programs, including for senior management, tied to overall financial performance will help credit unions design compensation structures that align with strategic goals, member service priorities, and sound risk management.”
- We commented in support of the NCUA proposal to make three changes to streamline its regulations governing the purchase, sale, and pledge of eligible obligations by FCUs. Although only two Wisconsin-based credit unions are FCUs subject to these rules, we were able to share input from one of our state-chartered credit unions about why they support these revisions: “[W]e recognize that clearer, less prescriptive federal standards promote consistency across the system, reduce regulatory uncertainty, and streamline industry-wide practices.” They went on to give feedback on each of the three proposed amendments.
- We offered our backing for an NCUA proposal to remove a regulation that addresses the refund of interest to members. The NCUA explained that the FCU Act already authorizes an FCU’s board of directors to refund interest to members at the close of business on the last day of any dividend period. This proposal would reduce regulatory burden by limiting the number of sources that FCUs must check to ensure compliance with laws and regulations.
- We wrote to lend our support for an NCUA proposal to remove §701.26 of its regulations. That provision outlines the authority for an FCU to enter into contracts for assets or services that relate to its daily operations with other credit unions and organizations. We agreed with the NCUA’s rationale for removing this unnecessary rule: “The authority for an FCU to enter into contracts for operational services … is inherent in its charter and its general powers under the FCU Act. The regulation’s principal requirement – that such agreements be in writing – is a standard business practice, which exists regardless of whether it is mentioned in the NCUA’s regulations.”
- We wrote in support of an NCUA proposal to amend the language of a rule that says an FCU may impress and enforce a lien against a member’s shares and dividends to satisfy any outstanding obligations owed to the credit union. The regulation applies only to FCUs. The rule defines the phrase “except as otherwise provided by law or except as otherwise provided by federal law.” The NCUA proposal would remove the definition of this phrase “because the language is unnecessary and obvious. The definition does not add anything to the plain meaning of these words.”
Compliance Roundtable – September 16 (In-Person)
Join members 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.