NWCUA Regulatory Advocacy Update: Portland Hearing on Responsible Banking Resolution
The weekly Regulatory Advocacy Update outlines the NWCUA’s efforts to reduce the regulatory burden on credit unions and protect the larger movement. Included here are updates on Portland’s responsible banking resolution and new NCUA initiatives.
May 10, 2012
Portland City Council Holds Hearing on Responsible Banking Resolution
The Portland City Council held a hearing Wednesday allowing public comment on its Responsible Banking Resolution. The Northwest Credit Union Association (NWCUA) worked closely with the mayor’s office, ultimately influencing the final version to include credit union employment statistics and eliminate references to Community Reinvestment Act (CRA) requirements.
“The Association supports the resolution and is pleased to see the city’s support for local financial institutions and the implementation of the credit union public funds program,” said NWCUA Director of Regulatory Advocacy Jaycee Winn. “We did offer comments on the final draft of the resolution, which highlights that ‘while credit unions are tax-exempt institutions, they pay the same share of federal, state, and local taxes as any business, including real and personal property tax and employment taxes.’”
Public comments at the hearing were overwhelmingly positive favoring the resolution, with the only opposition coming from the Oregon Bankers Association. Groups testifying in favor were the Main Street Alliance, Oregon Action, Oregon Banks Local, and Pam Leavitt on behalf of the Association.
The meeting went well beyond time allotted due to controversial matters addressed before the resolution, so a final vote was not taken. The meeting was recorded and will be reviewed by city council members, with a vote scheduled for May 16 at 2:30 p.m. The Association will continue to monitor this process.
NCUA Issues Letter to Credit Unions on Interest Rate Risk
The National Credit Union Administration (NCUA) recently issued a Letter to Credit Unions on interest-rate risk (IRR), highlighting the Sept. 30 deadline for impacted credit unions to adopt a written IRR policy and implementation program.
Signed by NCUA Board Chairman Debbie Matz, the NCUA letter highlights that while impacting 45 percent of credit unions, those credit unions hold 96 percent of assets. Impacted credit unions will be those exceeding $50 million in assets and those with assets between $10 million and $50 million holding first mortgages loans and investments with maturities exceeding five years totaling 100 percent or more of net worth at quarter end.
The letter addresses some key questions about the policy, including guidance on how the NCUA will implement the rule. The NCUA stated, “Examiners will be expected to consider the size, complexity and risk exposure of each FICU when evaluating written IRR policies and risk-management programs.” Their goal is consistent implementation “while taking into account differences among institutions.”
While many credit union already have IRR policies and programs that meet the new requirements in place, the Association has provided a model policy for those that do not, which can be found on the Model Policies page on InfoSight.
Read the NCUA letter to credit unions and see the exam questionnaire here.
NCUA says Loan Participations Will Not Be Capped at 25 Percent
The NCUA’s draft proposal on loan participations issued late last year received significant opposition from credit unions. One of the major concerns was a provision that would limit credit unions to a 25 percent cap on participations from a single originator.
“There was no rationale provided for the 25 percent,” Winn said. “It seemed to come out of nowhere.”
In response to a question asked by a credit union CEO at the most recent NCUA Listening Session, Matz responded by saying that the NCUA heard credit unions “loud and clear” and that the 25-percent cap will be changed in the final regulation.
“Although she didn’t provide additional details, we’re hopeful that other concerns with the proposal will be addressed as well,” Winn said. “This is a great example of the power and importance of the comment process. While it may feel that letters and emails may go on deaf ears, they do have an impact.”
Read the NCUA proposal on loan participations and Association comment letter 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.