Final rule on credit union payday loans – PALs II – slated for NCUA Board action next Thursday

A final “payday alternative loan” rule easing some limitations on the agency’s current program is slated for action during the National Credit Union Administration (NCUA) Board’s open meeting next Thursday.

The payday rule proposal, titled Payday Alternative Loans (PALs) II, was issued last May and would make four changes to the agency’s current PALs (PALs I) program, providing:

  • a maximum loan amount of $2,000 and no minimum;
  • a maximum loan term of 12 months;
  • no minimum length of credit union membership;
  • no restriction on the number of loans a federal credit union may make to the borrower in a six-month period, provided the borrower has only one outstanding loan at a time.

The PALs II action is likely to address the status of the Consumer Financial Protection Bureau (CFPB) rule on payday lending, which had provided a safe harbor for PALs I loans. It’s also expected to address the agency’s thinking on a PALs III alternative, which the NCUA has suggested could use differing fee structures, loan features, maturities, and loan amounts.

In addition to PALs II, the board on Thursday is slated to take final action on rules for supervisory committee audits and the federal credit union (FCU) bylaws. A report on the National Credit Union Share Insurance Fund (NCUSIF) is also slated.

The supervisory committee audit proposal, from February, would incorporate recommendations made by the agency’s Regulatory Reform Task Force. Briefly, it would replace the current optional audit procedure described in the Supervisory Committee Guide with a targeted list of minimum procedures contained in a new Appendix A; and eliminate the current 120-day time limit for receiving a third-party audit report (credit unions instead could negotiate a delivery date).

Updates to the FCU bylaws, proposed last October, would conform the bylaws to legal opinions issued by the NCUA Office of General Counsel and remove outdated or obsolete provisions.

The Sept. 19 open board meeting is set for 10 a.m. ET.

NCUA Board Sept. 19 meeting agenda