NCUA’s 4th Round of Deregulation Proposals Announced

The National Credit Union Administration (NCUA) recently announced a fourth round of deregulation proposals on January 27. The notice may be accessed here.

The most recent round of deregulation proposals are:

Changes for Public Unit and Non-Member Shares – 12 CFR 701.32(b)(2)

• The Board proposes to remove the provision requiring a credit union board to develop a written plan on the intended use of public unit and nonmember shares if those funds, along with any borrowings, would exceed 70 percent of paid-in unimpaired capital and surplus.
• Impact on Credit Unions: The change would give Federally Insured Credit Union (FICU) boards the option of developing their own policies for managing public unit and non-member shares within existing aggregate limits, allowing credit union boards to manage their funding sources and reliance on these funds with greater flexibility.

Notice of Termination of Excess Insurance Coverage – 12 CFR 741.5

• The Board proposes to eliminate 12 CFR 741.5 which requires a FICU with share insurance coverage that supplements the coverage provided by the National Credit Union Share Insurance fund to give its members a 30-day notification if it plans to end its supplemental coverage.
• Impact on Credit Unions: This change would only require a credit union to notify its members if it terminates previously held supplemental share insurance coverage. The specific 30 day time-frame for notification would no longer be required.

Maximum Borrowing Authority – 12 CFR 741.2

• The Board proposes to remove the maximum borrowing authority from the NCUA’s regulations that establish the requirements for obtaining and maintaining federal share insurance with the Share Insurance Fund. This provision applies to all FICUs.
• Impact on Credit Unions: This change would eliminate the borrowing limit that currently applies to Federally Insured State Charted Credit Unions (FISCUs). FISCUs would be subject to any applicable state law requirement. The statutory limit on Federal Credit Union (FCU) borrowing would still apply.

Disclosure of Share Insurance – 12 CFR 741.10

• The Board proposes to eliminate 12 CFR 741.10. Under the current regulation, all FISCUs that are permitted by state law to accept non-member shares or deposits must identify such accounts on all required reports and notify all non-member account holders in writing that their accounts are not insured by the Share Insurance Fund. The Board is proposing to remove this section because duplicative of the disclosures FISCUs are already required to make as part of their agreement for maintaining federal share insurance.
• Impact on Credit Unions: This proposed removal would eliminate an unnecessary and redundant requirement.

Comments are due to the NCUA by March 31. California’s Credit Unions and Nevada’s Credit Unions are soliciting feedback. Please contact Lisa Quaranta, vice president of regulatory advocacy, to share comments by March 16 or if you have any questions.