Removing Barriers Blog

NCUA Proposes Rule for Additional PAL Products
Posted May 24, 2018 by CUNA Advocacy

The NCUA Board proposed a rule to provide federal credit unions with an additional alternative option to offer payday alternative loans. Under the proposed framework, PAL II loans would be permitted up to $2000, with no minimum, and a maximum loan term of up to 12 months. Currently, PAL loans are restricted to $200-$1000 and a 6 month term. Comments on the proposal will be due 60 days following publication in the Federal Register. 

“CUNA has raised the importance of PAL expansion to NCUA and is pleased that the board has taken steps to promote small dollar lending by credit unions., and we’re pleased NCUA has given federal credit unions additional consumer-friendly options to offer their members,” said CUNA Deputy Chief Advocacy Officer Elizabeth Eurgubian. “As member-owned financial cooperatives, credit unions are ideally positioned to be a safe and affordable alternative to predatory lenders.”

The board also finalized its rule on involuntary liquidations and claims procedures. The CUNA-supported rule would permit an employee’s final paycheck to include compensation for the pay period immediately preceding the liquidation, as well as accrued but unpaid sick and vacation leave, including any severance to which the employee was entitled, provided such terms were documented and objectively applied.

The meeting also featured a quarterly update on the National Credit Union Share Insurance Fund, which posted a net income of $33.1 million in the first quarter of 2018. The fund’s net position was $15.0 billion at the end of the first quarter of 2018.