A final rule intended to update, clarify, and simplify the agency’s regulation on corporate credit unions – including their investment in credit union service organizations (CUSOs) – was issued by unanimous vote Thursday of the three-member National Credit Union Administration (NCUA) Board during an open meeting available to the public via audio-only livestream.
The NCUA’s corporate regulation – part 704 of the agency’s rules and regulations – was among the rules included in the NCUA’s 2019 review of one-third of agency rules and regulations. A proposal was issued this February, with changes made in the final that responded to commenters urging additional “burden reduction.”
Effective 30 days after its publication in the Federal Register, the final rule:
- permits a corporate credit union to make a minimal investment in a CUSO without the CUSO being classified as a corporate CUSO and subject to heightened NCUA oversight;
- expands the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board;
- removes the experience and independence requirement for a corporate credit union’s enterprise risk management expert;
- clarifies the definition of a collateralized debt obligation; and
- simplifies the requirement for net interest income modeling.
The agency reported receiving 35 comment letters on the proposed rule. Comments were received from credit unions (corporate and natural-person), credit union leagues and trade associations, individuals, corporate CUSOs, and an association of state credit union supervisors, the agency said.
In other action Thursday, the board issued a proposed rule on federal credit unions’ use of derivatives and received a report on cybersecurity issues amid the COVID-19 pandemic. A request for information slated on supervisory guidance review and improvements in communications did not come up, having been removed from the agenda prior to Thursday’s meeting.
During the cybersecurity briefing, staff and board members (all three) said the report reinforced the need for the NCUA to be provided oversight authority over credit unions’ third-party vendors. The agency’s Office of Inspector General (OIG) this summer released a report recommending such authority, which is also supported by the Financial Stability Oversight Council (FSOC).