Rules on credit union non-member deposits, membership eligibility on agenda for regulator

A final rule on non-member shares and a rulemaking on credit union membership are on the agency for next week’s meeting of the board for the federal credit union regulator, according to the agenda for the meeting posted Thursday.

The regular monthly meeting of the National Credit Union Administration (NCUA) Board for October is set for Oct. 24 in Alexandria, Va.; the start time is 10 a.m.

In May, the NCUA Board proposed changing the basis for measuring the regulatory limit on non-member and “public unit” shares (or savings deposits) at credit unions. Under the proposal, up to 50% of paid-in and unimpaired capital and surplus could be accepted by federal credit unions.

In addition, the proposal eliminated the current requirement that an FCU request a waiver from the agency’s regional office if it wants to exceed the limit. Instead, an FCU would be required to develop a specific use plan if its non-member shares, combined with its borrowings, exceed 70% of paid-in and unimpaired capital and surplus. Examiners would also be charged with watching the level at which credit unions accepted the non-member shares (which also include the public unit shares, or funds provided by the federal government and its agencies, state governments and agencies, local public school systems, and more).

In other action, the board is scheduled to issue a “public rulemaking” related to its membership rules. In August, a federal appeals court overturned a district court ruling from the previous year, which vacated two provisions of the agency’s chartering and field-of-membership (FOM) rule that had been in effect since February 2017. The rule was adopted in 2016. Those provisions qualified a “combined statistical area” with fewer than 2.5 million people as a “local community” that can be served by a credit union; the other raised to 1 million people the population limit for rural districts that may be served.

But in August, the U.S. Circuit Court of Appeals for the D.C. Circuit ruled that NCUA holds “vast discretion to define terms because Congress expressly has given it such power.” However, the court also stated that the authority is not boundless. “The agency must craft a reasonable definition consistent with the Act’s text and purposes,” the court stated.

Following that ruling, NCUA Board Chairman Rodney Hood indicated last month that the agency would take a “phased approach” in moving forward on its regulation, given that the court’s ruling remained subject to requests for further review. Hood also said “in the near future” the agency would consider a limited proposal to address the definition of local community. The federal court, in its decision, focused on the definition of “Core-Based Statistical Areas” that do not include the urban core.

The board is also scheduled to hear a briefing on cybersecurity during next week’s meeting.

Agenda: NCUA Board meeting, Oct. 24