August 27, 2014 – For immediate release
NASCUS Files Comments in Response to NCUA’s Proposed Changes to NCUA Rules and Regulations Parts 721 and 741
On Monday, NASCUS filed comments with the NCUA in response to the NCUA’s proposed changes to NCUA Rules and Regulations Parts 721 and 741 regarding securitization of assets.
As proposed, the new explicit securitization rule would be extended to all federally insured credit unions. Currently, state law controls for state-chartered credit unions.
“NCUA has not demonstrated a pressing safety and soundness concern that warrants preemption of state authority,” wrote NASCUS. NASCUS also addressed the NCUA’s Credit Union Service Organization (CUSO) Rule and issuing entities, noting that NCUA’s rules regarding permissible activities for CUSOs do not apply to FISCUs.
In addition, NASCUS, in its comment letter, called the residual interest limit of 25 percent “too restrictive,” and recommended NCUA take a more flexible approach, allowing qualified credit unions to set residual interest limits in policy rather than promulgate a blanket restriction.
While NASCUS made several recommendations regarding NCUA’s proposed changes to NCUA Rules and Regulations Parts 721 and 741, though, ultimately, NASCUS commended NCUA for addressing securitization as an additional tool for some credit unions to manage interest rate risk and liquidity.
“Strong federal and state charters are important to preserving the principles of dual chartering, and the authority to securitize loans would provide an additional tool for some credit unions to manage interest rate risk and liquidity,” said NASCUS President and CEO Mary Martha Fortney. “The credit union system must continue to understand the importance of maintaining a viable and effective dual chartering system and all should work to ensure a meaningful dual chartering system.”
Elizabeth Kirkland, Director of Communications and Marketing, email@example.com or (703) 528-5974