The credit union federal regulator wants to extend a requirement that federally insured credit unions (FICUs) seeking to buy assets or assume liabilities from a privately insured credit union (or other non-FICU financial institution) must, before the transaction is approved, submit a letter to the agency’s local regional director outlining the purchase or assumption.
The agency also noted that it has raised its estimation of the “regulatory burden” on the credit unions for filing the letters.
The renewal of the “information request” will be issued as early as Thursday for a 60-day comment period.
According to filings Wednesday with the Federal Register, the National Credit Union Administration (NCUA) said that under its regulations FICUs must seek approval from the agency before buying assets or assuming liabilities of a privately insured credit union (PICU) or other financial institution.
“A FICU seeking approval must submit a letter to the appropriate NCUA Regional Director stating the nature of the transaction, and include copies of relevant transaction documents,” states the Register filing. “Relevant transaction documents may include, but are not limited to: the credit union’s financial statements, strategic plan, and budget, inventory of the assets and liabilities to be transferred, and any relevant contracts or agreements regarding the transfer.”
In the filing, NCUA said it uses the information it gleans from the letters to regional directors to “determine the safety and soundness of the transaction and risk to the National Credit Union Share Insurance Fund (NCUSIF),” the agency-managed program that insures savings at federally insured credit unions.
The agency noted that it has increased its estimate of the “regulatory burden” placed on FICUs for filing the requests to 120 “burden hours” per response.
Referring to the estimate, the agency wrote that it “has increased the time necessary to prepare and assemble the cover letter and the required transaction documents to reflect a more accurate accounting of burden associated with this reporting requirement.”