Proposed Rule Summary

NCUA 12 CFR Part 705
Community Development Revolving Loan Fund (CDRLF)

 

Prepared by NASCUS Legislative and Regulatory Affairs Department
June, 2016

NCUA is proposing several technical amendments to its rule governing the Community Development Revolving Loan Fund (CDRLF). The CDRLF was created by Congress in 1979 and NCUA took exclusive administrative control in 1986. The CDRLF provides loans, technical assistance grants, and funding for response to community emergencies, to credit unions serving predominantly low-income members. Discretion to allocate the funds is delegated to NCUA’s Office of Small Credit Union Initiatives (OSCUI).

Comments must be received by August 22, 2016.  A copy of the proposed rule may be found here. Please provide and feedback to NASCUS for consideration for inclusion in NASCUS’ official comment letter by August 15, 2016.

Summary

§ 705.1. Authority, Purpose and Scope – NCUA proposes reorganizing this section and deleting some provisions. The provisions in existing §705.1(e) that would be deleted merely recite what topics are covered in the rule.

§ 705.2. Definitions – NCUA proposes deleting the definitions of the terms ‘‘Board,’’ ‘‘Credit Union,’’ and ‘‘Fund’’ from this section because the terms are defined elsewhere in §705 and §700. NCUA would also remove the cross-reference to § 705.6 as unnecessary.

§ 705.5. Terms and Conditions – NCUA will separate the “terms and conditions” for loans and technical assistance grants into separate sections. NCUA proposes a substantive change related to the current §705.5(b) maximum aggregate loan amount of $300,000 for CDRLF loans. The proposed rule would eliminate the reference to a maximum loan amount because NCUA has discretion to issue loans in any amount it deems appropriate. NCUA would publish any future self-imposed loan limits in its Notice of Funding Opportunity.

NCUA would also amend §705.5(h) by adding ‘‘security agreements’’ to the list of terms and conditions that will be addressed in the Notice of Funding Opportunity or applicable loan documents. NCUA would make similar amendments to provisions related to technical assistance grants. The amended regulatory language will then be re-designated as proposed § 705.6.

§705.6. Application and Awards – NCUA proposes removing any reference to NCUA publishing a Notice of Funding Opportunity on other government Web sites. NCUA is not legally required to do so and it currently does not do so. NCUA currently publishes a Notice of Funding Opportunity on its Web site and in the Federal Register. In addition, NCUA’s current rule states that NCUA Regional Director concurrence is required for a CDRLF loan or grant, however in practice RD concurrence is only sought for loans. Accordingly, NCUA would delete the requirement for regional director concurrence for technical assistance grants.

NCUA also proposed streamlining the process for CDRLF loan approval for FISCUs. Rather than requiring a FISCU to obtain concurrence from its state regulator before NCUA considers the FISCU’s loan application, NCUA proposes to obtain formal state regulator concurrence directly after it has received a loan application.

§ 705.9. Reporting and Monitoring - NCUA would amend this section to “encourage” rather than “require” credit unions to report to members regarding technical assistance grants (credit unions are required to report to members regarding CDLRF loans).

NCUA’s Required Administrative Analysis
NCUA states that the proposed rule would not have a significant economic impact on a substantial number of small credit unions, and it is not required to perform an RFA analysis. With respect to the Paperwork Reduction Act (PRA), NCUA asserts that the proposed changes are technical and will not create new paperwork burdens or modify any existing paperwork burdens. Finally, NCUA has determined that this proposal does not constitute a policy that has federalism implications for purposes of Executive Order 13132, nor does it have implications for the Treasury and General Government Appropriations Act.