Removing Barriers Blog

NCUA Finalizes Loans to Members Rule
Posted March 14, 2019 by CUNA Advocacy

Today, the NCUA Board received its quarterly briefing on the status of the Share Insurance Fund and adopted a final rule regarding loans to members.

Quarterly Report – Share Insurance Fund

Today’s report on the Share Insurance Fund indicated total income of $74.3 million and net loss of $67.3 million for the quarter ending 12/31/2018, and total income of $302.9 million and net loss of $226.5 million for all of 2018. The balance sheet showed total liabilities and net position of $15.85 billion, a decrease of roughly $800 million from 12/31/2017. The number of CAMEL Code 4/5 credit unions decreased slightly from the preceding quarter to 193; CAMEL Code 3 credit unions also decreased to 940. While total number of credit union failures in 2018 was down two to 8 from 2017, the total assets of those credit unions was significantly higher than those that failed in 2017.

Final Rule – Loans to Members (Part 701)

The Board adopted a final rule regarding loans to members and lines of credit to members intended to reduce regulatory burden, improve clarity, and make compliance easier. Specifically, the final rule:

  • Makes NCUA’s loan maturity requirements more user friendly by identifying in a single section all of the various maturity limits applicable to federal credit union loans.
  • Makes explicit that the maturity date for a “new loan” under generally accepted accounting principles (GAAP) is calculated from the new date of origination.
  • Amends the regulations to more clearly express the limits for loans to a single borrower or group of associated borrowers.

While discussing the rule during today’s Board meeting, Chairman McWatters characterized it as “exactly the type of clean-up rule [the agency] should be promulgating,” noting it will make it easier for users of the rule.

CUNA expressed our support of the rule during its proposed period in the Fall, stating that we appreciate “NCUA’s efforts to streamline and organize regulations applicable to credit unions to improve clarity and make compliance easier.”