Nov. 15, 2018

CONTACT: Shelton Roulhac, NASCUS Communications; sroulhac@nascus.org

NASCUS PRESIDENT AND CEO LUCY ITO
ON NCUA’S 2019-2020 BUDGET AND PROPOSED RULE,
PARTS 704 and 713, FIDELITY BONDS

“NASCUS commends NCUA for employing a “principles-based approach” to calculating the budget’s Overhead Transfer Rate; will carefully review NCUA’s fidelity bond requirement proposal."

ARLINGTON, Va. – This morning, the NCUA Board approved the agency’s 2019-2020 budget, which sets the 2019 overhead transfer rate at 60.5%. The Board also issued a proposed rule that would amend the fidelity bond requirements with a 60-day comment period.

NASCUS President and CEO Lucy Ito issued the following statements in response to today’s developments:  

  • On the 2019 – 2020 Budget 

“We are pleased that the ‘principles-based approach’ to calculating OTR that NCUA now employs is continuing to benefit federally insured credit unions — both federal and state charters. The methodology is fostering clarity and fairness for federally insured credit unions.”

  • On the fidelity bond requirements proposal 

“As with all rules that apply to federally-insured state-chartered credit unions, there is ongoing concern that the manner in which NCUA’s rules are organized may lead to confusion among credit unions and federal and state examiners regarding which rules apply to state charters. Over the course of the 60-day comment period, NASCUS will carefully review the proposed fidelity bond requirements to determine the extent of the impact on state-chartered credit unions. ”

NASCUS supports NCUA obtaining examination authority over technology service providers that provide services to federally insured credit unions, provided that NCUA relies on state examinations of service providers where state authority exists.

ARLINGTON, Va. – This morning, NCUA Chairman J. Mark McWatters testified before the Senate Banking, Housing, and Urban Affairs Committee at a hearing titled the “Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act.”

In written and oral testimony, Chairman McWatters requested that the Committee consider legislation to provide NCUA with examination and enforcement authority over certain third-party vendors — including credit union service organizations (CUSOs). The Chairman noted the potential systemic cybersecurity risks associated with the growth of fintech and NCUA’s need for the authority to defend the credit union system from such risks.

“We continue to support NCUA obtaining examination authority over technology service providers that provide services to federally insured credit unions. However, in states with existing vendor examination mechanisms in place, deference should be given to the state authority to supervise these vendors,” said NASCUS President and CEO Lucy Ito. 

“As far back as 2001, NASCUS has supported limited NCUA authority over technology service providers, specifically. Most recently in 2015, in view of growing cybersecurity concerns, NASCUS promulgated a public policy position, again, proscribing NCUA’s authority to technology service providers with the added proviso that NCUA defers to state examinations of these entities in those states that have authority,” continued Ito.  “Indeed, state regulators already cooperate with each other and with NCUA when examining technology service providers. Addressing cybersecurity threats necessitates a collaborative state-federal effort.”

The National Association of State Credit Union Supervisors (NASCUS) is the primary resource and voice of the state governmental agencies that charter, regulate and examine the nation’s state-chartered credit unions. NASCUS membership is made up of state-chartered credit unions, state regulators and other supporters of the state credit union system. NASCUS is the only organization dedicated to the defense and promotion of the state credit union charter and the autonomy of state credit union regulatory agencies.