ALEXANDRIA, Va. (8/13/14)--While the National Credit Union Administration's fixed-assets proposal is meant to apply to federal credit unions, it could also apply to state-chartered credit unions in certain states. A number of states have a statutory provision that allows state-chartered credit unions to exercise powers allowed for federal credit unions.
The NCUA's proposal would allow federal credit unions with assets of $1 million or more to exceed the limit on the purchase of fixed assets, currently 5% of shares and retained earnings, without receiving a waiver from the agency. This is provided the credit union maintains a fixed-assets management program.
Credit unions in Alabama, Arizona, Illinois, Iowa, Maine, Oklahoma, Rhode Island and Texas are permitted by their state credit union acts to exercise powers conferred on federal credit unions without seeking approval from the state's regulator.
In Illinois--one state with such a parity provision--members of the Illinois Credit Union League will discuss the possibilities with state regulators to see if state-chartered credit unions can benefit from the proposal.
"We look at statutory requirements on an annual basis, and I'm sure this will be one of the topics discussed," said Patrick Smith, league vice president of communications and regulatory affairs. "We're going to look very closely at the proposal and make sure that none of our state-chartered credit unions will be at a disadvantage just because they have a state charter."
State-chartered credit unions in states with a parity provision can also be affected by the NCUA's proposal on securitization of assets, if the state regulator determines a credit union has the resources and capacity to support securitization. The proposal would authorize federal credit unions to securitize loans it has originated, provided the transaction meets certain requirements.
The Credit Union National Association has issued a comment call for both proposals. Comments on asset securitization are due to the NCUA by Aug. 25. Comments on the fixed-assets proposal are due to CUNA by Oct. 1, and to the NCUA by Oct. 10.
Use the resource link below for information about the fixed-asset proposal.