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Corporate Assessment, MBL, CUSO Rule Changes Urged In CUNA Letter To NCUA
WASHINGTON (8/6/13)--There are a number of immediate actions the National Credit Union Administration could take that would greatly improve the credit union regulatory framework, the Credit Union National Association told the agency Monday.

The NCUA should consider:
  • Ending assessments for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF);
  • Revamping its member business lending (MBL) rule; and
  • Cancelling or revamping a proposed credit union service organization (CUSO) rule that has been delayed for nearly two years.
CUNA Deputy General Counsel Mary Dunn made the recommendations in a CUNA comment letter as NCUA reviews one-third of it body of regulations, as it does each year.

The agency should alter its MBL rule to give credit unions more latitude and authority to conduct those loans, Dunn recommended in the CUNA letter.

Dunn suggested that "all of the regulatory requirements for MBLs that are not specifically required by the Federal Credit union Act" be eliminated for well-managed, well-capitalized credit unions that operate successful MBL programs, including:
  • The requirement for the personal guarantee of the borrower(s);
  • Loan-to-value ratios;
  • Construction and development loan limits;
  • Appraisal requirements.
"At the very least, we urge the agency to develop and implement in all regions a waiver process that will be timely and allow credit unions to obtain much needed flexibility in operating their member business loan programs," Dunn wrote. She also urged the agency to revisit exemptions for federal credit unions under the "history of primarily making" language in the FCU Act.

The CUNA letter also called on the agency to minimize CUSO regulatory requirements and revamp CUSO requirements contained in its proposed derivatives rule. "A new broad rule regarding CUSOs should not be driven by problems a few credit unions have encountered with their CUSOs, particularly when the vast majority of CUSOs are operated in a safe and sound manner, providing much needed services to credit unions and their members," Dunn said.

TCCUSF assessments "are a major burden to credit unions," she added. The CUNA letter reiterated recent CUNA comments that this year's assessment of 8 basis points should cover the remaining losses on the legacy assets. "With the improvement in the performance of legacy assets, assessments are no longer necessary," the letter added.

Overall, the CUNA letter noted, compliance costs resulting from regulatory burdens continue to be one of the major concerns and operational hurdles for credit unions. The annual regulatory review is an opportunity for the agency to minimize the regulatory burden for credit unions and decrease their costs, Dunn said.

For more CUNA comment on other items on the NCUA's full 2013 review list, use the link.
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