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Inside Washington (02/22/2012)
  • ARLINGTON, Va. (2/23/12)--While state regulators share some concerns about loan participations with the National Credit Union Administration (NCUA), the National Association of Credit Union Supervisors (NASCUS)  wrote in a Tuesday comment letter that it cannot support the proposal in its current form. In its letter, NASCUS said that concerns about loan participations can be reduced with strong underwriting, adequate program contract review and effective third party due diligence. "We strongly recommend NCUA work with state regulators to address supervisory concerns regarding loan participations in a manner that does less harm to the dual chartering system, more effectively mitigates material risk, and improves oversight while not unnecessarily burdening credit unions," NASCUS wrote. NASCUS agreed that loan participations present some material risk, but it said NCUA's proposed rule fails to make a convincing case that is the best way to mitigate that risk, especially considering its impact on dual chartering and state law. Historically, state-chartered federally insured credit unions have looked to state law and regulation to govern their loan participation activities. The NCUA proposal effectively wipes out the distinction between state and federal charters, NASCUS said …


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