Credit union regulator eyes move to virtual examinations, supervision; risk-based net worth proposal pulled from agenda

A request for information (RFI) on aspects related to the future of a virtual examination program was issued by the federal regulator of credit unions during its open meeting Thursday for a 60-day comment period. The National Credit Union Administration (NCUA) Board did not, however, take up any discussion or action on a proposal addressing risk-based net worth (RBNW).

Included on Thursday’s open meeting agenda in a notice last week, the RBNW item had been pulled by the start of the session. Following the meeting, board Chairman Rodney Hood reported the change in a tweet, stating, “It is unfortunate that I did not have a solid second vote to move this critical piece of regulatory relief forward.”

During Thursday’s open meeting, the board received a briefing on the NCUA Guaranteed Notes program (reported here), received a briefing on minority depository institutions, issued a request for information on a virtual examination program, and issued a final rule that makes technical revisions to 15 parts of its rules and regulations.

The NCUA’s “Virtual Examination and Technology Survey” RFI seeks answers to 36 questions related to alternative procedures to modernize the agency’s examination program as well as any unnecessary hurdles or burdens regarding credit unions’ ability to take advantage of technological developments such as artificial intelligence, machine learning, process robotics, fintech (financial technology). Information on how the agency might update its policies to help drive greater use of technology is sought.

NCUA says that through modernization, it intends to:

  • Reduce burden on credit unions and increase agency efficiency by reducing onsite examination time;
  • Improve offsite supervision capabilities;
  • Provide more consistency and standardization for the examination and supervision process;
  • Improve communication between examiners, credit unions, and state supervisory authorities; and
  • Explore and evaluate technology utilization and appetite for adoption.

The final rule issued Thursday is intended, the agency said, to correct minor technical problems in its rules and improve clarity. Most of these take effect upon their publication in the Federal Register. The others, providing amendatory instructions in the agency’s risk-based capital rule (published in 2015), will take effect Jan. 1, 2022, when the rule itself takes effect. The NCUA said the changes are not substantive.

“Virtual Examination and Technology Survey” RFI notice for Federal Register

Final rule notice for Federal Register

2019 Annual Report to Congress on Preserving Minority Depository Institutions

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