NCUA Removes Two Controversial Provisions from Corporate CU Rule

The National Credit Union Association (NCUA) Board of Directors met on April 21 to discuss a bevy of issues.  Below are the highlights of the meeting.  You can read the full report here.

Corporate Credit Union Changes
NCUA finalized their rule on Corporate Credit Unions (CCUs) removing two of the most controversial provisions:  one limited credit unions to be a member of only one CCU at a time; and the other required all credit unions using a CCU contribute to the Corporate Stabilization Fund.

There were, however, five amendments to NCUA’s CCU rule that were adopted:

  • Internal control and reporting requirements similar to those required under FDIC and Sarbanes-Oxley for other financial industries;
  • Establishment of an enterprise-wide risk management (ERM) committee staffed by an independent risk-management expert;
  • All CCU board votes must be recorded and included in board minutes;
  • Disclosure of CUSO compensation of senior CCU executives serving as dual employees; and
  • Allowing CCUs to charge reasonable one-time or periodic fees to members to facilitate retained earnings growth.

The changes adopted regarding board responsibilities, disclosure of CCU executive’s CUSO-related income, and CCU’s ability to impose membership fees will become effective 30 days after publication in the Federal Register; however some will be delayed over the next few years.

Expanded Corporate CUSO Activities
Previously corporate CUSOs were allowed two permissible activities:  brokerage services and investment advisory services.  Everything else required NCUA approval.

The board voted to expand those activities to include information technology and asset liability management.  While judged to pose minimal risk, CCUs providing CUSO service must comply with certain reporting requirements and ongoing assessments of financial health.

NCUA Supervisory Committee and Appeals Rights
The board approved IRPS 11-1, which allows the Supervisory Review Committee (consisting of three senior NCUA staff members) to add denials of technical assistance grant reimbursements to the list of issues a credit union may appeal to the committee.  Other items that can be appealed to the committee include CAMEL ratings of 3, 4, or 5; adequacy of loan loss reserve provisions; revocations of RegFlex authority for FCUs; and loan classifications.

Insurance Fund Report
The NCUSIF ended March with an equity ratio of 1.29 percent and a $1.19 billion reserve balance.

Through March the NCUSIF had total 2011 income of $57.1 million and total expenses of $27.5 million, resulting in year-to-date net income of $29.6 million.  Five credit unions had to be resolved in 2011 at a cost of $34.4 million.

In March 2011, 366 federally insured credit unions, with assets of $42 billion and shares of $37.3 billion, had CAMEL code 4 or 5 designations. Additionally, 1,798 CAMEL code 3 credit unions had assets of $149.4 billion and shares of $132.2 billion. Overall, CAMEL code 3, 4 or 5 credit unions held approximately 21 percent of all credit union assets, down slightly for the third consecutive month.

The TCCUSF total liabilities and net position stood at $391 million at the end of March, about $6 million higher than the end of February.  Financial data reported for both the NCUSIF and the TCCUSF are preliminary and unaudited.

Questions or comments? Contact Northwest Credit Union Association Director of Regulatory Affairs Jaycee Winn: 503.350.2209,

Posted in Events, NCUA, NWCUA.