October 1 , 2012

NASCUS urges NCUA to reconsider its proposed rulemaking regarding the regulatory definition of "troubled condition."

Arlington, Va. NASCUS is convinced that the long standing protocol between NCUA and state regulators regarding the regulatory classification of a state credit union to be in "troubled condition" does not need to change. As such, NASCUS wrote in a September 28 comment letter, it cannot support the NCUA's proposal.

"NCUA's own proposal concedes that disagreement between the state and NCUA on a CAMEL rating that would determine whether a state credit union is in "troubled condition" is exceedingly rare and occurs in less than 4% of all cases. NCUA has not asserted that a ratings discrepancy caused a material delay in supervisory action contributing to an increased loss to the NCUSIF ", NASCUS writes in the letter.

In the comment letter, NASCUS asserts that the cooperation between NCUA and the states has worked for two decades. NCUA's proposed rule would forsake the long-standing protocol that properly recognizes the state regulator's role as primary regulator for FISCUs and allow NCUA to unilaterally classify a FISCU to be in "troubled condition." The rule as proposed, NASCUS argues, weakens the credit union system and is unnecessary for effective administration of the share insurance fund.

"NASCUS continues to take every opportunity to preserve state authority in the oversight of state-chartered, federally insured credit unions," said NASCUS President and CEO Mary Martha Fortney. " A meaningful dual chartering system is essential for the future of a healthy credit union system, and from NASCUS' perspective, NCUA has an obligation to preserve the dual chartering system, as weakening the dual system is itself a material risk to the entire credit union system."

NASCUS and state regulators remain committed to working with NCUA to mitigate material risk throughout the credit union system.

Information Contact:
Jenny Champagne, VP Regulatory Development and Government Relations, or (703) 528-5974

The NASCUS mission is to enhance state credit union supervision and advocate a safe and sound state credit union system.