In comments submitted to the National Credit Union Administration, the American Bankers Association and the Independent Community Bankers of America said that rules that would allow Credit Union Service Organizations to expand their lending services should be withdrawn from consideration.
In a letter to Senate Banking Committee ranking Republican Pat Toomey of Pennsylvania, National Credit Union Administration Chairman Todd Harper had suggestions about changing when the agency can assess premiums on credit unions, increasing the NCUA’s Share Insurance fund ceiling, and changing the assessment basis. Harper is concerned about how the law may force the agency to charge premiums during poor economic times, not at times when credit unions might find it easier to pay.
The National Credit Union Administration board did not issue its regularly scheduled update of the equity ratio at this month’s board meeting. Instead, according to Chairman Todd Harper, they will continue to analyze the equity ratio and will review the first quarter Call Reports. This is just one of the issues addressed at the NCUA April board meeting.
The National Credit Union Administration approved an interim final rule by notation. The rule is designed to assist credit unions facing the sudden enforcement of prompt corrective action regulations due to an influx of deposits from the additional Economic Impact Payments. The rule was listed on the April agenda, but the board decided there was an immediate need for the rule.
National Credit Union Administration Chairman Todd Harper thinks the proposed rule is “half-baked” but credit union trade groups are endorsing a proposal to increase the threshold for credit unions to be defined as “complex.” The proposed rule states that any risk-based net worth requirement would only apply if a credit union has more than $500 million in assets at a quarter’s end. The definition impacts the effect of the Risk-Based Capital Rule that goes into effect on Jan. 1, 2022.
Credit unions might be forced to decline members or their deposits if the NCUA does not take action to ease credit union net worth ratio problems caused by the pandemic, CUNA and the American Association of Credit Union Leagues warned late last week.
The American Bankers Association would like the National Credit Union Administration to extend the comment period on a proposed rule that would allow CUSOs to originate any type of loan that a federal credit union may originate. The current comment period ends on March 29 and the ABA wants it extended until May 28.
In a letter to National Credit Union Administration Chairman Todd Harper, Sen. Pat Toomey, the ranking Republican on the Senate Banking Committee, said that the Modern Examination and Risk Identification Tool (MERIT) should be used for examinations as soon as possible, even if the training for it is done virtually.
In a letter to the Senate Banking Committee and the House Financial Services Committee, Curt Long of the National Association of Federally-Insured Credit Unions argues that the National Credit Union Administration’s equity ratio will bounce back. Therefore NAFCU is opposed to a credit union premium assessment.
At the February National Credit Union Administration meeting it was reported that the equity ratio dropped to 1.26%. The board did not immediately impose a premium, but Chairman Todd Harper noted that it may eventually be required. A restoration plan is legally required if the equity ratio dips below 1.2%. Other issues were also reported and discussed at the meeting.