Chartering, FOM, Bylaws Highlight NCUA’s Annual Regulatory Review

NCUA should only promulgate new or expand existing rules only if they are warranted based on “a compelling need,” CUNA wrote to NCUA Thursday. NCUA conducts an annual review each year of one-third of the agency’s regulations in an effort to determine those that need to be updated, clarified, simplified or eliminated, and CUNA sent its comments on this year’s review.

CUNA also noted that NCUA’s process for seeking comments and regulations included in the regulatory review could be improved, including addressing confusion regarding rules intended for review that are already subject to proposed changes or recent modifications.

“In addition, since the notice of the regulatory review is not required to comply with the Administrative Procedure Act (APA), and is therefore not published in the Federal Register, potential commenters may be unaware of its issuance. To ensure adequate input is received, we ask the NCUA to consider ways to better highlight its request for comments on the regulatory review,” the letter reads. “Since the regulatory review process is outside the APA, comments are not made available for public inspection.

“In addition, the NCUA does not publicly respond to commenters’ suggestions. While not required to do so, it would be very useful if the NCUA were to choose to not only post public comments on its website but also publicly respond to input received. Doing so would permit CUNA, and credit unions alike, to identify patterns and/or trends within the regulations included in the review,” it adds. “This would allow for more effective and efficient advocacy, and ideally result in an improved operating environment for credit unions.”

While CUNA commented on most regulations up for review, highlights on specific areas include:

  • Federal credit union chartering and field of membership: CUNA applauds NCUA for its efforts to improve several field of membership processes, but also believes the agency can accomplish even more to improve the field of membership regulation;
  • Federal credit union bylaws: CUNA highlighted issues raised in its comment letter on NCUA’s bylaws proposal, including supporting aspects of changes to bylaw amendments, concerns with reductions of individuals available to achieve a quorum and encouraging NCUA to permit electronic voting in elections if the credit union determines it’s the most appropriate way;
  • Low-income credit unions: CUNA urges NCUA to review the low-income designation to provide a path for additional credit unions to qualify, provide greater transparency with respect to qualification thresholds and enhance certainty about what happens should a credit union drop below a threshold; and
  • Corporate credit unions: CUNA notes it is looking forward to working with NCUA on a thorough review of the corporate credit union regulation to ensure the regulation does not impose unnecessary constraints on corporate credit unions’ ability to respond to innovations in the financial services marketplace.

Regulations included in the 2019 review include parts 701 through 710, which cover: federal credit union chartering and field of membership; federal credit union bylaws; loans to members and lines of credit to members; loan participations; services for nonmembers within the field of membership; payment on shares by public units and nonmembers; designation of low-income status and acceptance of secondary capital accounts by low-income designated credit unions; Treasury tax and loan depositories; borrowed funds from natural persons; capital adequacy; investment and deposit activities; corporate credit unions, truth in savings; and mergers and conversions.