Consolidate rules, consider a shorter
‘insured by …’ statement, NASCUS writes

Aug. 8, 2016 -- Rules affecting federally insured state-chartered credit unions (FISCUs) should be consolidated in one place – following the example of other federal regulators -- and numerous other changes should be considered in NCUA’s rules, including shortening how federal share insurance is described.

In its comment letter to NCUA for its 2016 Regulatory Review, NASCUS touched on eight specific areas where the agency could ease regulatory burden, with an emphasis on the impact on FISCUs.

At the core of NASCUS’ letter is its recommendation – once again -- that the agency consolidate in one section all of its rules applicable to FISCUs, making it easier for state credit unions to understand which rules apply to them – and thereby facilitating compliance among credit unions and reducing confusion among both state and federal examiners.

“In the past, NCUA has rejected our recommendation while noting that we were free to provide credit unions and examiners a consolidated version of the rules of our own making,” NASCUS wrote. “Suffice to say, a third party’s reorganization of the rules is unofficial and no substitute for official, properly organized rules. We note both the Consumer Financial Protection Bureau (CFPB) and the Financial Crimes Enforcement Network (FinCEN) undertook reorganization of their rules to make those rules more accessible, searchable, and understandable. NCUA should follow their example.”

NASCUS also wrote that the time has come for NCUA to consider shortening how it officially describes federal share insurance coverage of institutions – “Federally insured by NCUA.” NASCUS noted that phrase is still longer than how FDIC describes insurance coverage: “Member, FDIC.” “The ability for credit unions to use the shortened version is important in an age of evolving media focused on far reaching, rapid dissemination of limited length messages,” NASCUS wrote. “We recommend NCUA continue to evaluate its mandated official statement to determine whether further shorthand could be appropriate.

In other recommendations, NASCUS touched on:

CUSOs: Although NASCUS has opposed expansion of NCUA’s CUSO rules, to the extent the agency maintains the regulatory framework, NASCUS suggests that agency rules make clear that the CUSO Registry is the means by which CUSO’s report directly to NCUA (rather than the current requirement, which states a CUSO file an annual report directly with NCUA).

Appeal process: Much of the appeal function remains shrouded in mystery, NASCUS wrote, with no readily available information on how many appeals are filed each year, how many of those appellants were granted in-person appeals, and what were the overall disposition of appeals. The agency should publish information, in aggregate, about those subjects to “allow stakeholders to better evaluate the efficacy of appeals.” NASCUS stated that would instill “greater confidence in the due processes surrounding the supervision program.”

Appraisals: NCUA should ensure any changes in appraisal requirements implemented by other federal bank regulators are carefully considered for the credit union system.

Share insurance: NASCUS stated that it agrees the time is right to discuss how the share insurance fund should be structured in the future, understanding that perhaps the current structure might remain best suited for the credit union movement. “We urge NCUA to engage state regulators and stakeholders in evaluating any changes sought for the fund,” NASCUS wrote.

Fidelity bond coverage/supervisory committee audits, verifications: Current rules are unclear in both areas as to their application to FISCUs; NASCUS urged clarifying which provisions affect state credit unions (short of consolidating rules affecting state credit unions).

NASCUS comment letter/ Regulatory Review (2016)