Proposed Rule Summary

NCUA 2016 Regulatory Review

Prepared by NASCUS Legislative & Regulatory Affairs Department
January, 2016

The NCUA’s Office of General Counsel maintains a rolling review schedule that identifies one-third of NCUA’s existing regulations for review each year and provides notice to the public of those regulations under review so the public may have an opportunity to comment. This process provides stakeholders a chance to make recommendations for regulatory improvements.

NCUA's Regulatory Review is a not an exclusive list of NCUA rulemaking this year. The agency will also engage discretionary rulemaking involving any provision it believes necessary.

NCUA's complete NCUA Regulatory Review (2016) is available on NCUA’s website. NCUA will be reviewing its regulations Part 711 thru Part 747. NASCUS notes that several of these provisions are also subject to comment as part of the EGRPRA #4 comment period. In addition, note that § 741 is among the provisions scheduled for review, which means EVERY SINGLE NCUA REGULATION APPLICABLE to FISCUs is SUBJECT TO COMMENT!!

Comments on NCUA's 2016 regulatory review are due to NCUA by August 8, 2016. NASCUS will file comments in response to the 2016 Regulatory Review. Please contact NASCUS before to July 15, 2016, to submit recommendations for the NASCUS comment letter.

Summary

  • § 711 Management Official Interlocks – Applies to FISCUs by incorporation in § 741.209. The Management Interlocks rule generally prohibits an individual from serving in a senior executive position of a credit union and another depository institution (non-credit union).
  • § 712 Credit Union Service Organizations (CUSOs) - Applies in part to FISCUs by incorporation in § 741.222. The CUSO rules in Part 712 that apply to FISCUs by incorporation include § 712.2(d)(2)(ii), § 712.3(d), § 712.4 and § 712.11(b) and (c). These are the provisions that require credit unions to maintain corporate separateness from their CUSOs, and to contractually obligate their CUSOs to submit annual reports to NCUA and to provide NCUA and state regulators access to the CUSOs’ books and records.
  • § 713 Fidelity Bond and Insurance Coverage for Federal Credit Unions - Applies to FISCUs by incorporation in § 741.201, which directs FISCUs to follow the “minimum fidelity bond coverage stated in part 713.” However, Part 713 contains more than just the numerical minimum bond coverage, it contains all the requirements for FCU bond coverage, including, among others, board duties (§ 713.2), forms to be used (§ 713.4), and from what entity coverage may be purchased (§ 713.3). NCUA’s reference by incorporation is unclear the extent to which these requirements apply to FISCUs.
  • § 714 Leasing – Does not apply to FISCUs.
  • § 715 Supervisory Committee Audits and Verifications - Applies to FISCUs by incorporation in § 741.202. These provisions include the requirements that FISCUs obtain either annual supervisory committee audits, or independent audits, depending on their asset size. It also requires verification of accounts at least once every two years.

            NASCUS has repeatedly noted that the extent to which Part 715 applies to FISCUs is unclear from its incorporation by reference in Part 741 and should be clarified by NCUA.

  • § 717 Fair Credit Reporting – Does not apply to FISCUs.
  • § 721 Incidental Powers – Does not apply to FISCUs
  • § 722 Appraisals - Applies to FISCUs by incorporation in § 741.203. The rule requires FISCUs to obtain written appraisals for real estate transactions involving loans with $250k+
  • § 723 Member Business Loans - Applies to FISCUs by incorporation in § 741.203, Minimum Loan Policy Requirements. While this provision is subject to the 2016 Rule Review, NASCUS notes that NCUA recently proposed a comprehensive revision to how MBL is regulated by the Agency. It is expected that the new MBL rule will be finalized in first quarter 2016.
  • § 724 Trustees and Custodians of Certain Tax-Advantaged Savings Plans – Does not apply to FISCUs.
  • § 725 National Credit Union Administration Central Liquidity Facility - Applies to FISCUs by incorporation in § 741.210
  • § 740 Accuracy of Advertising and Notice of Insured Status - Applies to FISCUs by incorporation in § 741.211. These provisions prescribe the official share insurance signage and accuracy in advertising.
  • § 741 Requirements for Insurance – References all rules applicable to FISCUs, allowing for comment on any NCUA rule or regulation.
  • § 745 Share Insurance and Appendix - Applies to FISCUs by incorporation in § 741.212. These provisions describe the amount of coverage and describes the various accounts covered by NCUA administered share insurance. This includes NCUA’s recently amended IOLTA share insurance rules.
  • § 747 Administrative Actions, Adjudicative Hearings, Rules of Practice and Procedure, and Investigations – Applies to FISCUs by incorporation in § 741.3(a) and § 741.313. NCUA’s §747 is made up of ___ subparts, A-M. Of these, subpart E applies only to FCUs. The remaining subparts, applicable to FISCUs, include the following:
  • Subpart A addresses the administrative procedure related to, and due process afforded, credit unions subject to an administrative order by NCUA. The provisions create recourse to an administrative law judge and the right of parties to have counsel and call witnesses.
  • Subparts B & C limit discovery in adjudication to document production, controls the adjudication of NCUA liquidation orders, and provides that NCUA may terminate insurance for 1) Engaging or having engaged in unsafe or unsound practices, is in unsafe or unsound condition, or has violated any applicable law, regulation, or order.
  • Subpart D provides for removal of official charged in state or federal court for a crime of dishonesty.
  • Subpart G allows a party prevailing over NCUA to seek attorney fees.
  • Subpart H governs investigations conducted by the NCUA Board or its designee.
  • Subpart I governs witnesses in an NCUA investigation.
  • Subpart J applies to a credit union’s notice to NCUA to add or replace an official pursuant to § 1790a and § 700.2 where the credit union either has been chartered less than 2 years; or is in “troubled condition,” as defined by §701.14.
  • Subpart K requires NCUA to adjust the maximum amount of its CMPs to the rate of inflation.
  • Subpart L establishes the rules and procedures for federally insured credit unions subject to discretionary action under PCA. Credit unions are provided the right to a hearing before the NCUA board and the right to call witnesses. Credit unions may also seek the determination of the NCUA Ombudsman.  Subpart L also requires NCUA copy state regulators all related notices to a SCU under the provision.
  • Subpart M establishes the rules and procedures for NCUA’s imposition of discretionary PCA actions against a corporate credit union.