Jan. 24, 2019

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

NASCUS SUMMARIZES CONCERNS ABOUT THE NCUA FIDELITY BOND PROPOSED RULE

NASCUS cannot support the proposal as it will burden federal credit unions and federally insured state-charted credit unions, confuse directors’ understanding of their proper role, increase operating costs, and discourage qualified candidates from serving on credit union boards. 

ARLINGTON, Va. – In response to NCUA’s proposed changes to NCUA’s rule Part 713, Fidelity Bond and Insurance Coverage for Federal Credit Unions, NASCUS has written a comment letter noting that the organization cannot support the proposal due to concerns that the rule will adversely impact the dual charter system and credit unions, generally.

“NASCUS is concerned that the rule as proposed by NCUA is an unnecessary overreach by the share insurer with respect to state chartered credit unions that will weaken the dual charter system by preempting state laws related to fidelity bonds,” NASCUS Executive Vice President and General Counsel Brian Knight wrote in the association’s official comment letter on the proposal. “The prescriptive nature of the proposal also runs counter to the current approach to mandatory bond coverage of federal bank regulators. If finalized, the proposed rule would likely increase costs for credit unions, insert the credit union board into matters best handled by management, and possibly encumber a credit union’s ability to recruit board members.”

Despite the NASCUS view that the proposed changes have “limited supervisory utility,” Knight expressed support for the codification of the 2017 NCUA Legal Opinion allowing for joint fidelity bond coverage between a credit union and its CUSOs in certain limited circumstances and for the 10-year review of approved bond forms.

While NASCUS cannot support the rule as proposed, the organization stated in its letter that it is “ready to work with NCUA to identify a better supervisory path forward to address NCUA’s concerns with fidelity bond rules and the issues raised by this proposal.”

LINK:
NASCUS comments: Proposed Rulemaking, Fidelity Bonds

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.