Proposed changes in NCUA’s share insurance rule would clarify coverage, conform with FDIC coverage rules

A proposal that would conform the agency’s own federal share insurance coverage rules with changes implemented in 2022 by the federal bank deposit insurance agency were issued for comment Thursday by the National Credit Union Administration Board.

The NCUA said the proposed changes, issued by unanimous vote of the agency’s  three-member board, are intended to (1) provide federally insured credit unions (FICUs), FICU employees, and those with member accounts at FICUs, with a rule that is easier to understand; (2) provide parity with changes adopted by the Federal Deposit Insurance Corp. (FDIC) in January 2022; and (3) facilitate the prompt payment of share insurance in accordance with the FCU Act, “among other objectives.”

The agency summarized the proposed changes as follows:

  • establish a trust accounts category, providing for coverage by the National Credit Union Share Insurance Fund (NCUSIF) of funds in both revocable and irrevocable trusts deposited at federally insured credit unions in the accounts of members “or those otherwise eligible to maintain insured accounts”;
  • provide for consistent share insurance treatment for all mortgage servicing account (MSA) balances held to satisfy principal and interest obligations to a lender;
  • include more flexible recordkeeping requirements to explicitly allow the NCUA to look to records held in the normal course of business that are maintained by parties other than federally insured credit unions and their members.

The agency said its proposed share insurance rule changes for trust accounts and MSAs would conform with revisions the FDIC approved in 2022 and which are set to take effect April 1, 2024.

Comments will be due on the proposal 60 days after its publication in the Federal Register.

Draft notice for Federal Register: Simplification of Share Insurance Rules proposal

Release: Board Issues Proposals on Fair Hiring in Banking; Simplification of Share Insurance