NASCUS Responds to NCUA Annual Rule Review

August 8, 2012 - In response to the National Credit Union Administration (NCUA) annual Rule Review, NASCUS suggested recommendations on behalf of the state credit union system including providing parity for federal insured state chartered credit unions (FISCUs) in some areas of NCUA's regulations and a consolidation of insurance rules in Part 741.

"NASCUS continues to take every opportunity to preserve and protect state authority in the oversight of state-chartered, federally insured credit unions," said NASCUS President and CEO Mary Martha Fortney. "Our comments for this year's Regulatory Review highlight a few areas where state law should be reinforced in the supervision of state charters."

First, NASCUS continues to encourage the NCUA to consolidate all insurance rules in Part 741 of NCUA’s Rules and Regulations. FISCUs must reference rules in both Part 741 and in applicable rules incorporated by reference in areas for federal credit unions. "It has long been NASCUS’ experience that identifying which rules incorporated by reference apply to FISCUs and which rules do not apply has caused confusion among credit unions and state and federal examiners," NASCUS stated in its comment letter.

Regarding loan participation regulations, NASCUS recommends eliminating the requirement of Regional Director approval when purchasing a loan participation interest at an institution not insured by the share insurance fund. This provision is more restrictive toward FISCUs than NCUA's provisions for federal credit unions (FCUs) found in §701.22 regarding FCU ability to participate in loans. "There is no compelling reason for the different standards for state and federally chartered institutions with respect to participation loans," NASCUS stated. "NASCUS recommends NCUA streamline the rules regarding loan participations to apply equally to state and federal credit unions."

Additionally, NASCUS suggested the agency make parity changes to Part 701.21, Loans to Members and Lines of Credit to Members, to align it with the treatment of state Member Business Lending (MBL) rules in Part 723.20. NASCUS also recommends parity changes 701.32, Payments on Shares by Public Units and Nonmembers, and encourages the agency to include exemption language and defer to state law for certain areas of its conversion and merger rules for FISCUs.

To view our complete letter, follow this link.