COMMENT CALL: The National Credit Union Administration (NCUA) has announced the fifth 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. Information on the earlier rounds can be found in the “open comment calls” and the “closed comment calls” Regulatory Advocacy pages of our website.
The NCUA is requesting comments on three new proposals that would clarify agency guidance or eliminate unduly burdensome or duplicative requirements. The three proposals are summarized below.
Round Five
- Conversion of insured credit unions to mutual saving banks. The NCUA proposes to reduce regulatory burden and increase flexibility by eliminating some procedural, disclosure, and communications requirements for converting insured credit unions (including federally insured, state-chartered credit unions in Wisconsin and elsewhere) to mutual saving banks.
Impact on credit unions: Among other things, the proposed change would simplify regulatory compliance for conversion disclosures and allow credit unions the flexibility to design disclosures that are effective and clear for their members.
- Mergers of insured credit unions into other credit unions; voluntary termination or conversion of insured status. The NCUA proposes to retain the core disclosure and notification requirements when a credit union’s members vote on a decision to merge or terminate federal share insurance coverage and convert to private insurance, but eliminate prescriptive requirements associated with those disclosures.
Impact on credit unions: Note that Wis. Stats. §186.34 requires all Wisconsin state-chartered credit unions to maintain federal share insurance through the NCUSIF.
This proposed change would relax a dictate to provide modest merger-related cost savings and reduce unnecessary burden. It would provide credit unions with greater flexibility in designing effective communications, while still ensuring that members receive clear and prominent notice of a proposed termination of federal insurance.
- Organization and operation of federal credit unions (low income designation & community charters). The NCUA proposes to rescind Interpretative Ruling and Policy Statement 06-1 (IRPS 06-1), which limited underserved area additions to multiple common bond credit unions’ fields of membership (FOMs). The IRPS is no longer needed because the current FOM requirements are in the NCUA’s Chartering Manual, which is published in Appendix B to part 701.
Impact on credit unions: This change would only impact federal credit unions, not state-chartered credit unions. It would eliminate a redundant standard currently listed in more than one area, easing the compliance burden on federal credit unions by limiting the number of sources they must check to ensure compliance with applicable community chartering and FOM requirements.
Make your voice heard
The League may comment on some or all of 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 April 6, so that our comment letter (which is due April 13) 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.