Removing Barriers Blog

NCUA Board Holds March Meeting
Posted March 18, 2021 by CUNA Advocacy

Interim Final Rule – Central Liquidity Facility (Part 725)

The Board adopted an interim final rule to update its regulations regarding the temporary changes to the CLF initially made by the CARES Act, including increasing the CLF’s borrowing authority and allowing corporate credit unions to act as agent members to borrow for their own needs.

The Consolidated Appropriations Act (CAA) extended several changes to the CLF that were first made by the CARES Act. The CAA extended the sunset date of the CLF provisions included in the CARES Act from December 31, 2020 to December 31, 2021. Today’s interim final rule updates NCUA’s CLF regulations to reflect the extended sunset date of these provisions.

The interim final rule will become effective upon publication in the Federal Register.

In his remarks, Chairman Harper stated his intent to urge Congress to make the CLF provisions first incorporated into the CARES Act permanent. Further, Chairman Harper stated the importance in quickly filling the vacant CLF president position.

 

Interim Final Rule – Asset Thresholds Pertaining to Large Credit Unions (Parts 700, 702, 708a, 708b, & 790)

The Board adopted an interim final rule to permit federally insured credit unions to use asset data as of March 31, 2020, in order to determine the applicability of certain regulatory asset thresholds during calendar years 2021 and 2022. Specifically, the interim final rule allows a credit union to use March 31, 2020, financial data when determining whether the institution is subject to capital planning and stress testing requirements under the NCUA’s regulations and supervision from the Office of National Examinations and Supervision. As a safeguard, the Board retains the right to deny this relief to certain credit unions that present greater risk to the NCUSIF.

The agency recognizes the impact of the government stimulus payments together with consumers change in spending habits has had on credit union growth, in some cases pushing them over the $10 billion threshold. This temporary interim final rule is intended to mitigate transition costs on credit unions related to the pandemic, and will conclude at the end of 2022. The measurement period will be reinstated March 31, 2022 for determining future compliance. 

The interim final rule will become effective upon publication in the Federal Register.

In expressing support for the interim final rule, Chairman Harper noted that because the asset growth was rapid and unexpected, many affected credit unions have not adequality planned and budgeted for the transition associated with crossing the $10 billion threshold. He further noted that some of these credit unions may eventually fall below the threshold, as government intervention subsides and consumers return to more traditional spending patterns.

CUNA has urged the agency to issue such a rulemaking, including in a recent letter to Chairman Harper.

On a related topic, Chairman Harper mentioned the Board will soon consider a temporary rule to extend the PCA relief provided for in an interim final rule that expired at the end of last year. Specifically, the May 2020 interim final rule:

  • Permitted the NCUA Board to issue an order to temporarily waive the earnings retention requirement for any credit union classified as adequately capitalized; and
  • Permitted credit unions to submit simplified net worth restoration plans if the reduction in capital was been caused by share growth resulting from a temporary condition due to the pandemic.

CUNA has called on the Chairman to extend this PCA relief.

 

Board Briefing – NCUA Guaranteed Note and Asset Management Estate Programs

The Board was briefed on the NGN and AME Programs. As the corporate resolution continues, staff announced an upcoming distribution, and noted that the agency will continue to make distributions as appropriate until the program is terminated.

The agency announced an interim distribution totaling $368.7 million, which is expected to be sent to the over 2,000 affected credit unions by April 30. In early April, NCUA will begin reaching out directly to each affected credit union and later today will post updated FAQs regarding the distribution on NCUA.gov.