CUNA Regulatory Advocacy Report

NCUA Posts Agenda for April Open Board Meeting

NCUA posted the agenda for the April 30 open Board meeting last Thursday. A finalized proposal on changing field of membership regulations tops the agenda. NCUA Director of Examination and Insurance, Larry Fazio, provided some insight into the final rule during testimony before a House subcommittee Thursday stating, “The final rule will include substantially more regulatory relief than the proposed rule as NCUA responds to the comments received,” Fazio said. “For example, the Board will likely add five additional types of groups that will automatically satisfy the associational common bond provisions.”

The agenda also includes a proposed rule for interest on lawyer accounts (IOLTA). This proposal implements the Credit Union Share Insurance Fund Parity Act, which was signed by President Obama in December, and allows the National Credit Union Share Insurance Fund (NCUSIF) to insure IOLTAs and “other similar escrow accounts.” CUNA sent NCUA a letter addressing the implementation of the law and has continued to advocate for a rule that allows for insurance coverage on many others types of accounts, including funeral accounts, realtor escrow accounts and prepaid cards.

Other items on the agenda are:

  • Final rule on corporate credit unions concerning technical amendments;
  • Proposed rule on aggregate lending limit for corporate credit unions;
  • Proposed rule on adding share insurance coverage under interest on lawyer trust accounts;
  • An exemption request by the State of Connecticut Department of Banking;
  • Board briefing on a final interagency rule concerning minimum requirements for appraisal management companies; and
  • National Credit Union Share Insurance Fund quarterly report.

CUNA Advocacy staff will provide a summary to the Board meeting on Thursday afternoon.

NCUA Hints at Possible Changes to Supplemental Capital in Latest Newsletter

NCUA’s latest newsletter hints at possible changes regarding supplemental capital. Chairman Matz elaborated on the five areas of what she previously referred to as “the year of regulatory relief.”

Matz said there is a clear need for supplemental capital in certain circumstances, and she is committed to allowing it to be counted in full. “For example, NCUA could count certain forms of subordinated debt as supplemental capital for the risk-based capital ratio,” Matz wrote. “It could be issued to members and non-members, but it would be uninsured.”

For this to happen, NCUA would need to address the following, according to Matz:

  • Provide consumer protections;
  • Change the order of Share Insurance Fund payout priorities to recognize that supplemental capital accounts are not insured; and
  • Set prudent standards, such as minimum redemption periods, to ensure supplemental capital is available to cover losses during times of stress.

Matz said effective dates of these changes could coincide with the proposed implementation of the agency’s risk-based capital proposal in 2019.

NCUA Testifies Before Congress on Regulatory Burdens

NCUA supports several CUNA-backed regulatory relief bills, including ones that would raise the member business-lending cap and allow supplemental capital.

Last week, Larry Fazio, Director of NCUA’s Office of Examination and Insurance, testified before the U.S. House Financial Service Subcommittee on Financial Institutions and Consumer Credit at a hearing intended to hear from regulators on the issue of regulatory burden.

Subcommittee Chair Rep. Randy Neugebauer (R-T.X.) asked Fazio if he believed the NCUA is “getting it right” when it comes to its revised risk-based capital proposal, and about the proposed “capital cushion” that would be required of credit unions. Fazio said the rule would likely have a “relatively modest impact,” but it would be effective in picking up outliers.

In addition, Rep. Mick Mulvaney (R-S.C.) inquired as to why NCUA stopped holding public meetings regarding its budget and asked if the agency would hold a meeting for its 2016 budget. Fazio responded that he was unsure whether a meeting for the 2016 budget would occur. In addition, Fazio noted that Chairman Matz dispensed with the public meetings because they were unproductive and was concerned that such meetings gave the appearance of regulatory capture.

Current CUNA Regulatory Calls to Action

  • NCUA Issues New Fixed Assets Proposal (comments due by April 29)
  • NCUA Proposes to Revise Definition of “Small Entity” (comments due by May 4)
  • FAF Seeks Comments on Effectiveness of Private Company Council (comments due by May 11)
  • Financial Regulators (excluding NCUA) Issue EGRPRA Review (comments due by May 14)
  • CFPB Seeks Input on Credit Card Market (comments due by May 18)
  • CFPB Requests Comments on Consumer Complaint Database (comments due by May 26)
  • NCUA Seeks Comments on 2015 Annual Regulatory Review (comments due by August 5)

For other items of interest, visit CUNA’s Regulatory Advocacy page.

Posted in Article Post.