Removing Barriers Blog

NCUA Proposes Rule on Nonmember Deposits
Posted May 23, 2019 by CUNA Advocacy

Today, the NCUA Board issued a proposed rule on nonmember deposits, received an update on the work of CURE, and received its quarterly briefing on the status of the Share Insurance Fund. Chairman Hood thanked members of the Northwest Credit Union Association for their attendance at today’s meeting. 

Proposed Rule – Public Unit and Nonmember Shares (Part 701) 

At the recommendation of NCUA’s Regulatory Reform Task Force, the Board issued a proposed rule intended to provide greater flexibility in regard to accepting public unit and nonmember shares. Specifically, the proposal would change the way the nonmember deposit limit is calculated. 

In addition to the proposed rule document, NCUA provided a summary document that includes the following chart comparing current section 701.32 to the proposed rule: 

Comparison chart 2

In response to a question from Board Member McWatters, staff explained that while the proposed rule can be helpful to all credit unions, small and low-income credit unions are likely to benefit the most, due in part to the fact that small credit unions typically have higher net worth ratios, which is necessary to take full advantage of the proposal. 

NCUA will accept public comments on the proposal for 60 days following publication in the Federal Register. 

Board Briefing – Update on the Office of Credit Union Resources and Expansion 

The Board received an update on the work of CURE. A few highlights from the update:

  • NCUA staff are beginning to research ways to modernize the charter process to make it more automated and streamlined. 

  • In July, as a part of the modernization process, CURE will be launching an online portal for organizing groups seeking to charter a new credit union. 

  • NCUA will post a new Low-Income Designation Area Workbook to assist organizing groups and credit unions in determining low-income areas. 

In offering his support of modernization efforts, Board Member McWatters stressed the need for the chartering process to be streamlined and made easier. 

Quarterly Report – Share Insurance Fund 

Today’s report on the Share Insurance Fund indicated total income of $80.3 million and net loss of $16.1 million for the quarter ending 3/31/2019. The balance sheet showed total liabilities and net position of $16.21 billion, an increase of roughly $360 million from 12/31/2018. The number of CAMEL Code 4/5 credit unions increased slightly from the preceding quarter to 202; CAMEL Code 3 credit unions decreased to 905. So far in 2019 there has been one credit union failure. 

Board Member Harper asked about the large spike in total losses to the Fund in 2018 of around $1.6 billion. Staff confirmed that those losses were due primarily to the failure of taxi medallion credit unions and the funds for those anticipated losses have been set aside.