NCUA July Monthly Board Meeting Actions: CUSOs, Budgets and More

July 25, 2011 - In addition to a proposed rule regarding credit union service organizations (CUSOs), the National Credit Union Administration (NCUA) Board addressed several other issues including its mid-year budget review and an alternative for corporate credit unions in accounting calculations for the new capital requirements. See more about the CUSO proposed rule here.

FY 2011 Mid-Session Budget Review

Annually, a mid-year budget session is completed by NCUA and presented to the NCUA Board for approval. At the July 21 meeting, NCUA staff presented a decrease of $2 million in operating costs for the current year. The source of the reductions was mainly from a large decrease in employee, pay and benefits of $2,952,398. Rent, utilities and communications decreased as well. However, increases in travel, administrative and contracted services bring the mid-year budget reduction to $2 million. The 2012 agency budget will be addressed the November monthly meeting. Total staffing was increased by five field positions at mid-year.

Clarification of specific calculations pursuant to Part 704

Changes to Part 704, Corporate Credit Unions, were made final in September of last year. Part of the changes includes enhanced capital requirements including a leverage ratio, a Tier 1 risk-based capital ratio and a total risk-based capital ratio. The action approved by the NCUA Board at the July meeting clarifies the way corporate credit unions may align required capital levels with their balance sheets to comply with the corporate capital rules (Part 704), effective Oct. 20, 2011.

To address issues associated with the removal of assets from corporate balance sheets, the approved changes prudently clarify the calculation of Moving Daily Average Net Assets (MDANA) and Moving Monthly Average Net Risk-Weighted Assets (MMANRA) during the first year of implementation of the new corporate capital rules. Under the approved optional capital calculations, a corporate may choose to reset the clock on computing its 12-month moving average for assets under both the MDANA and MMANRA formulas. Essentially, the average will begin anew with the first month’s operations consisting of one month’s average assets. The second month will consist of a 2-month moving average, and ultimately by the twelfth month a new 12-month moving average will be developed.

Corporates will need to notify NCUA if they choose this alternative for calculating capital. They can only use this alternative for one year. To view more information, follow this link.

Other actions

The NCUA Board approved:

  • A request for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to borrow up to $4.0 billion from the U.S. Treasury to retire the Asset Management Estate (AME) promissory notes to the bridge corporate credit unions and to address any cash needs that may arise from the resolution of the bridge corporates.

  • The appointment of the Deputy Executive Director as the agency’s Chief Operating Officer. On January 4, 2011, President Obama signed the Government Performance and Results Modernization Act of 2010 into law.  Section 1123 of the Act requires that at each agency, the deputy head of agency, or equivalent, shall be the Chief Operating Officer of the agency. This NCUA Board action brings the agency in compliance with the new law. The NCUA’s Deputy Executive Director/Chief Operating Officer is currently Larry Fazio.

  • An interim final rule for federal credit unions regarding remittance transfers. This interim final rule was issued to conform to the Dodd-Frank Act, Section 1073. The Dodd-Frank Act added a new section to the Electronic Funds Transfer Act creating protections for consumers who, through remittance transfer providers, send money to people in foreign countries. The interim final rule follows the Dodd-Frank Act’s statutory language allows FCUs to offer all variations of remittance transfers to their members and those within their fields of membership, subject to consumer protections.