NCUA Releases Summary of Regulatory Modernization Results
December 29, 2014 – NCUA has published a matrix detailing the results of the Regulatory Modernization Initiative undertaken by the Agency beginning in September of 2011. Several of NCUA’s modernization initiatives benefited both FISCUs and FCUs, including:
- Modernized the definition of “small” credit union – NCUA raised the asset threshold for small credit unions from $10 million (where it had been since 2002) to $50 million. This “benefits” all FICUs under $50 million in terms of reduced compliance obligations for NCUA rules such as IRR, liquidity, and RBC.
- Eased Troubled Debt Restructuring reporting – NCUA now allows credit unions to report delinquencies with respect to current loan terms, not the terms of the loan when first originated. The change in TDR reporting was explained in LTCU 13-CU-03. This change eliminated the need for FICU to double track restructured loans for reporting requirements.
- LICU initiative – NCUA has implemented an opt-in procedure where the agency identifies eligible low income credit unions (LICUs) rather than requiring the credit unions to self-identify and apply for the designation.
- Blanket MBL waivers – In LTCU 13-CU-02, NCUA established seven criteria by which FICUs could apply for blanker waivers from certain MBL provisions, including appraisal requirements, C&D limits, equity requirements, LTV ratios, personal guarantees, limits on unsecured lending, and concentration limits.
In addition, six more NCUA initiatives benefitted only FCUs, including 1) expanding FOM definition of rural district, 2) approval of derivatives authority, 3) expanded government securities investment authority, 4) broader investment authority related to charitable donations, 5) elimination of fixed-asset cap, and 6) proposed asset securitization. NASCUS has provided NCUA several recommendations for meaningful regulatory relief for FISCUs and will continue to seek NCUA’s enactment of the NASCUS recommendations.
NCUA also cites several 2014 legal opinions from its General Counsel’s office that provided regulatory relief including allowing FCUs loan maturities up to 40 years after a loan modification and expanding the FCU definition of service facility to include video-teller machines. For FCUs and most FISCUs, NCUA also expanded the definition fleet under the MBL rule from two vehicles to five vehicles. The MBL fleet definition expansion followed similar changes by the state of Texas to its state specific MBL rule.
In announcing the Modernization initiative in 2001, NCUA Chairman Debbie Matz stated that where NCUA regulations were ineffective or overly burdensome, those regulations should be eliminated or streamlined. Matz noted that NCUA must balance safety and soundness and regulatory relief to ensure that regulation is sufficient to protect credit union members and also clearly written, targeted, and in line with modern business practices.