Proposed Rule – Field of Membership Shared Facility Requirements (Part
701, Appendix B)
In
a 2-1 vote, with Board Member Harper dissenting, the Board issued a proposal to amend the chartering
and FOM rules to modernize requirements related to service facilities for
multiple common bond FCUs.
The
proposal would amend the rules to include any shared branch, shared ATM, or
shared electronic facility in the definition of “service facility” for an FCU
that participates in a shared branching network. The FCU would not need to be
an owner of the shared branch network for the shared branch or shared ATM to be
a service facility. These changes would apply to the definition of service
facility both for additions of select groups to multiple common bond FCUs and
for expansions into underserved areas.
In
voting against the proposal, Board Member Harper stated that the proposal does
not conform to either the letter or spirit of the FCU Act, citing specific
concern with the “reasonable proximity” requirement of the Act. Further, Harper
opposed a 30-day comment period for this and the other proposals before the
Board today, expressing concern that these issues are too important to not
provide ample time for the public to provide input on.
The
agency will accept comments on the proposal for 30 days following publication
in the Federal Register.
Temporary Final Rule – Regulatory Relief in Response to COVID-19 (Part
701)
The
Board extended the effective date of its temporary final
rule (adopted in April 2020) that modified certain regulatory requirements to
help ensure credit unions remain operational and can properly conduct
appropriate liquidity management to address economic conditions caused by the pandemic.
Specifically, the temporary final rule:
- Raised the maximum
aggregate amount of loan participations that a credit union may purchase from a
single originating lender to the greater of $5,000,000 or 200% of the credit
union’s net worth.
- Suspended limitations on
the eligible obligations that a FCU may purchase and hold.
- Tolled the required
timeframes for the occupancy or disposition of properties not being used for FCU
business or that have been abandoned.
Without
today’s action, these temporary modifications would expire on December 31,
2020. Due to the continued impact of COVID-19, the Board has decided it is
necessary to extend the effective period of these temporary modifications until
December 31, 2021.
Board
Member Harper asked staff whether the agency would also be extending the
effective date of a rule issued earlier this year that temporarily defers the
appraisal requirement. Staff is not recommending extension of the effective
date, which will expire at year-end. Staff cited several reasons for allowing
it to expire, such as appraisal flexibilities put forth by the GSEs.
Proposed Rule – Mortgage Servicing Rights (Parts 703 & 721)
In a 2-1 vote,
with Board Member Harper dissenting, the Board issued a proposed rule to amend the NCUA’s
investment regulation to permit FCUs to purchase mortgage servicing rights
(MSRs) from other federally insured credit unions subject to the following
conditions:
- The underlying mortgage loans of the MSRs are loans the FCU is empowered
to grant;
- The FCU purchases the MSRs within the limitations of the FCU’s board of
directors’ written purchase policies; and
- The board of directors or investment committee approves the purchase in
advance.
In voting against the
proposed rule, Board Member Harper cited concerns over the proposal’s lack of guardrails
to protect against the numerous risks associated with mortgage servicing.
The agency will accept
comments on the proposal for 30 days following publication on the Federal
Register.
Proposed Rule – Overdraft Policy (Part 701)
In
a 2-1 vote, with Board Member Harper dissenting, the NCUA Board issued a proposal to amend one of the requirements
that a FCU must adopt as a part of its written overdraft policy.
Specifically,
the proposal would modify the requirement that a FCU’s written overdraft policy
establish a time limit, not to exceed 45 calendar days, for a member to either deposit
funds or obtain a loan from the FCU to cover each overdraft. The proposed rule
would replace the 45-day limit with a requirement that the written policy
establish a specific time limit that is both reasonable and applicable to all
members, for a member either to deposit funds or obtain a loan from the credit
union to cover each overdraft.
The
agency will accept comments on the proposal for 30 days following publication
on the Federal Register.
Final Rule – Subordinated Debt (Parts 701, 702, 709, & 741)
The
Board adopted a final rule to amend various parts of
the NCUA’s regulations to permit Low-income Designated Credit Unions, Complex
Credit Unions, and New Credit Unions to issue Subordinated Debt for purposes of
Regulatory Capital treatment.
The
final rule—being adopted largely as proposed—includes a few changes based on
comments, including:
- Amending the definition of
Accredited Investor,
- Providing a longer
timeframe in which a credit union may issue Subordinated Debt after approval,
- Reducing the required
number of years of Pro Forma Financial Statements an Issuing Credit Union must
provide with its application,
- Clarifying the prohibition
on Subordinated Debt issuances outside of the United States, and
- Clarifying that the Board
will publish a fee schedule only if it makes a determination to charge a fee.
The
final rule will become effective January 1, 2022.
CUNA
filed a comprehensive letter in support of the
Subordinated Debt proposal, which will help credit unions build additional
capital.
Board Briefing – Share Insurance Fund 2021 Normal Operating Level
The
Board was briefed on the NOL of the NCUSIF,
which will remain at 1.38% (the level it has been at since December 2019). Today’s
briefing was part of the agency’s periodic review of the equity needs of the
NCUSIF. The NOL calculation relies on established methodology for determining
the level. The briefing also acknowledged establishment of a working group that
will evaluate the NOL going forward, including review of factors that impact
the methodology.
In
response to a question from Board Member Harper regarding the likelihood of an
insurance premium in early 2021, staff noted that if the actual year-end equity
ratio of the NCUSIF is in line with the projected ratio (of 1.32%), then the
agency would not expect to charge a premium at the start of 2021.