Removing Barriers Blog

CUNA Supports NCUA’s “Second Chance” Guidance
Posted September 27, 2019 by CUNA Advocacy

Today, CUNA filed a comment letter in support of the NCUA’s proposed interpretive ruling and policy statement (IRPS) regarding Exceptions to Employment Restrictions under Section 205(d) of the FCU Act (referred to as the Second Chance IRPS). Section 205(d) requires a credit union to obtain approval by the NCUA Board prior to hiring an individual convicted of certain criminal offenses. The proposed IRPS replaces an existing IRPS from 2008 that provides guidance on Section 205(d).

We support the proposed IRPS because expanding the list of criminal offenses by a prospective employee that do not require approval by the Board will effectively reduce regulatory burden. Specifically, the proposed IRPS would not require an application for certain insufficient funds checks, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults.

A potential issue we heard from credit unions relates to the possibility the expanded offenses under the proposed IRPS could lead to increased insurance costs. While we have some concern that insurance costs could increase, after discussing the issue with industry partners, we understand no immediate premium increases are likely to result from the proposed IRPS. However, there is the possibility that such costs could increase if the expanded list of offenses ultimately leads to increased fraud at credit unions. If such a result occurs, we urge the NCUA Board to review the IRPS to determine how it can be further modified to eliminate any spike in fraudulent activity (that is tied to changes included within the IRPS).