NWCUA Regulatory Advocacy Update: Association Provides Feedback to NCUA
February 22, 2012
February 23, 2012
NCUA Loan Participation Proposal Could Be Devastating
A recent proposal from the National Credit Union Administration (NCUA) would place limits on the type and amount of loans in which credit unions are able to participate. In its comment letter, the Northwest Credit Union Association (NWCUA) expressed grave concern about this proposal and urged NCUA to withdraw the proposal from consideration.
Feedback from credit unions throughout the Northwest and across the country was clear; the impact could be devastating on credit unions of all sizes.
“Loan participations are a useful tool for credit unions to help diversify their balance sheets and mitigate risk,” the NWCUA said in its comment letter. “From large to small credit unions, participations provide the opportunity for more lending and provide a broader pool of loans from varying type, size, and geographic location.”
Regulatory burden continues to mount, and with the NCUA developing rules and regulations in an effort to protect only the National Credit Union Share Insurance Fund (NCUSIF), in some cases the credit union seems to get lost.
“In a post-Dodd-Frank world, credit unions continue to struggle to stay on top of current, proposed, and emerging compliance and regulatory requirements. Further increasing this burden and limiting the options for credit unions to manage their own balance sheet risk is not in the best interest of the industry. It is discouraging to see the NCUA continue to issue proposals which seem to take the tact of killing a fly with a cannon—taking isolated incidents and tightening down on the industry as a whole for fear of losses to the insurance fund.”
The Association also expressed concern about the waiver process and urged the NCUA to work on developing a system that is meaningful and well run. When even examiners advise credit unions that the waiver system doesn’t work, something is very wrong.
The proposal and comment letter are available in the Association Regulatory Advocacy Comment Letter archive.
Association Weighs in on Potential Emergency Liquidity Proposal
The NWCUA told the NCUA in a comment letter this week that a new blanket regulation requiring credit unions to have access to backup federal emergency liquidity sources as an insurance requirement would be unnecessary and something that can and should be handled by credit unions, their boards and examiners.
“The Association believes that ensuring the safety and soundness of credit unions and their ability to service their member-owners at all times is essential,” said the Association in its letter. “However, prescribing an approach which all credit unions must follow to ensure long-term liquidity access is not appropriate for NCUA and should be done by credit union boards in concert with leadership and regulators based on complexity, services provided, resources, and expertise.”
“We cannot express strongly enough the need for a more individualized approach to regulation,” said NWCUA Director of Regulatory Advocacy Jaycee Winn.
The comment letter went on to say that “credit unions throughout the Northwest and the country continue to feel the increasing burden of blanket regulatory requirements. The cry comes from credit unions, both large and small, that while they may have a certain asset size, or offer a certain service, broad overreaching requirements are not needed and only continue to build on the growing burden of regulation and compliance and move NCUA toward day-to-day credit union management.
“Credit unions should be allowed to work as a team with their boards, management, and examiners to have the proper means and methods in place to ensure viability and liquidity in times of economic emergency. This could be based on factors such as asset size, balance sheet make-up, risk considerations, and cost-benefit analysis. Credit unions know their business best and requiring them to take on a new prescribed burden when it won’t best serve their needs is counterproductive to helping continue this recovery.”
The Association did thank the NCUA for putting out this notion as an advanced notice of proposed rulemaking. While the NCUA continues to push out new and broad regulatory proposals, giving stakeholders as much time and say as possible is essential. No one—not the regulated or the regulator—wants to see drawn-out rulemaking processes that cause angst and uncertainty while trying to work with and thrive in the current economic climate.
The advance notice of proposed rulemaking and comment letter are available in the Association Regulatory Advocacy Comment Letter archive.
CFPB Launches Feedback Tool
The Consumer Financial Protection Bureau (CFPB) recently launched its online regulatory feedback tool. This tool allows the public to submit suggestions and comments online in hopes of garnering more comments.
“If you have ideas, we want to hear from you, and we will listen carefully to your thoughts and suggestions,” stated the CFPB.
The bureau is urging people to use this tool to submit comments on how to streamline inherited regulations. To see the new web tool and weigh in, click here.
The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy Jaycee Winn at firstname.lastname@example.org, or at 800.995.9064 x209.