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CUNA Regulatory Comment Call

December 30, 2005

EXECUTIVE SUMMARY

• The NCUA Board has issued a request for comments to identify outdated, unnecessary, or burdensome regulatory requirements imposed on federally insured credit unions. NCUA and the other federal financial institution regulators are required by a 1996 law, the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA), to review their rules at least once every ten years.
• EGRPRA requires the regulators to categorize the rules, publish the categories for comment, report to Congress on any significant issues raised by the comments, and eliminate unnecessary rules. NCUA will request comments on certain categories of rules every six months between 2003 and 2006.
• The regulators are now requesting comments with regard to three regulatory categories – Agency Programs, Capital, and Corporate Credit Unions.
• Comments are due by March 22, 2006. Please submit your comments to CUNA by March 6, 2006.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.coop and to Assistant General Counsel Lilly Thomas at lthomas@cuna.coop; or mail them to Mary and Lilly in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6733, if you would like a copy of the request for comments, or you may access them here.

BACKGROUND

NCUA and the other federal financial institution regulators are required by EGRPRA to review their rules at least once every ten years. EGRPRA requires the regulators to categorize the rules, publish the categories for comment, report to Congress on any significant issues raised by the comments, and eliminate unnecessary rules. NCUA will request comments on certain categories of rules every six months between 2003 and 2006.

BRIEF DESCRIPTION OF THE REQUEST FOR COMMENTS

The NCUA Board has issued a request for comments to identify outdated, unnecessary, or burdensome regulatory requirements imposed on federally insured credit unions. Because the credit union system differs from the banking system, NCUA will publish its notices separately but maintain comparability with the other regulators to the extent the issues are the same. The EGRPRA review supplements and complements the regulatory review that NCUA conducts under other laws and its internal policies.

NCUA sought comments on a number of categories of rules since 2003. This is the sixth and final notice required by EGRPRA. NCUA and the other regulators are now seeking comments on the following regulatory categories:

• Community Development Revolving Loan Program – 12 C.F.R. Part 705
• Central Liquidity Facility - 12 C.F.R. Part 725
• Designation of low-income status; receipt of secondary capital accounts by low-income designated credit unions - 12 C.F.R. § 701.34
• Prompt Corrective Action - 12 C.F.R. Part 702
• Adequacy of Reserves - 12 C.F.R. § 741.3(a)
• Corporate Credit Unions - 12 C.F.R. Part 704

NCUA encourages all comments with regard to these rules. Specifically, comments are encouraged with regard to the following issues:

• Whether statutory changes are needed.
• Whether the rules contain requirements that are not needed to serve the purposes of the statutes they implement.
• The extent to which the rules may adversely affect competition.
• The cost of compliance with regard to reporting, recordkeeping, and disclosure requirements, particularly on small credit unions (those with less than $10 million in assets).
• Whether any regulatory requirements are inconsistent or redundant.
• Whether any of these rules are unclear.

In addition to comments on individual rules and requirements, NCUA also encourages comments that pertain to product lines. This should be helpful in exposing redundant and potentially inconsistent regulatory requirements and Comments on such product lines may also include recommendations about rules that are not included in the current request for comments.

At the conclusion of the comment period, NCUA and the other regulators will review the comments received and will consider proposing amendments to these rules. Comments that may also require statutory changes are also encouraged. A report will be submitted to Congress discussing the issues raised in the comments and whether they must be addressed by legislative or regulatory changes.

• Do any statutory requirements underlying these rules impose redundant, conflicting, or unduly burdensome requirements? Are there less burdensome alternatives?
  
  

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• Are these rules consistent with the purposes of the statutes that they implement? Have circumstances changed so that any of these rules are no longer necessary? Do changes in financial products and services offered to consumers suggest a need to revise certain rules or statutes? Do any of the rules impose compliance burdens not required by the statutes they implement?
  
  

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• Would a different general approach to regulating achieve statutory goals with fewer burdens? Do any of these rules, or the statutes they derive from, impose inflexible requirements unnecessarily?
  
  

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• Do any of these rules or statutes create competitive disadvantages for credit unions as compared to other sectors of the financial services industry?
  
  

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• Do any of these rules, or the statutes they derive from, impose particularly burdensome reporting, recordkeeping, or disclosure requirements? Are any of these requirements similar enough in purpose and use so that they could be consolidated? Which of these requirements could be fulfilled electronically in order to reduce burden? Are any of the reporting or recordkeeping requirements unnecessary to demonstrate compliance with the law?
  
  

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• Do any of these rules impose inconsistent or redundant regulatory requirements that are not warranted by the purposes of the rule?
  
  

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• Are the rules drafted in clear and easily understood language?
  
  

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• How can these rules be changed to minimize any significant economic impact on a substantial number of small credit unions (defined as those with less than $10 million in assets)?
  
  

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• Other comments?
  
  

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