Agency changes timelines on emergency mergers, reorganizes some offices in headquarters

Final rules that would change the time range for considering credit union insolvency through emergency mergers, and some reorganization of the federal agency for credit unions, were both approved unanimously Thursday by the National Credit Union Administration (NCUA) Board.

The rules, approved by the board at its regular monthly meeting (and final one for 2017), will both take effect next month; the reorganization on Jan. 6, and the emergency mergers rule probably by mid-month (at the end of  30 days following publication in the Federal Register).

The emergency mergers rule, according to NCUA, amends the definition of “in danger of insolvency” in the agency’s Chartering and Field of Membership Manual. The current definition requires the agency to project a credit union to fall into at least one of three net worth categories over a period of time in order to be found in danger of insolvency.

“The rule lengthens the time period for two of the three current categories by six months and adds a fourth category to include credit unions that have been granted or received Section 208 assistance within the 15 months before an ‘in danger of insolvency’ determination has been made,” the agency said in a release.

The rule does not affect the other statutory criteria for authorizing an emergency merger.

According to NCUA staff, the final rule is intended to ensure that those credit unions that are in need of a merger are able to receive one. Further, they said, the rule does not mean that credit unions receiving 208 assistance will automatically be subject to a merger.

NCUA Board Chairman J. Mark McWatters observed at the meeting that the rule will effectively result in the agency catching problem credit unions earlier – and thus writing smaller checks to resolve the problems.

In other action, the board approved a reorganization (proposed in July) that eliminates or consolidates several offices at agency headquarters. Under the rule, the Office of Small Credit Union Initiatives (OSCUI) is eliminated, with most of its functions absorbed into a new office dubbed “Office of Credit Union Resources and Expansion” (OCURE). The new office will also include federal credit union chartering and field of membership functions, and the minority depository institution preservation program of the Office of Minority and Women Inclusion (OMWI).

In addition, the agency is renaming the Office of Consumer Financial Protection and Access to “Office of Consumer Financial Protection.”

NCUA is also planning to consolidate its five regions into three, but that consolidation will not be completed until Dec. 31, 2018. The board said it would issue another rule next year concerning the reduction of regional offices, which will take effect in 2019.

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