A fourth set of proposals to reduce credit union regulation was issued Tuesday by the federal regulator, focusing on non-member savings accounts, cancellation of supplemental deposit insurance, maximum borrowing authority and disclosure of savings insurance coverage.
The National Credit Union Administration (NCUA) said the proposals were part of its overall “deregulation project,” which was launched in December. The agency has said the project is aimed at changing or removing regulations it considers obsolete, duplicative of statutory requirements, intending to serve as guidance, or “overly burdensome.”
The latest group of proposals, which NCUA called the “fourth round,” focus on four areas in its regulations:
- Removing a provision requiring a credit union board to develop a written plan on the intended use of public unit and nonmember savings (or “shares”) if those funds, along with any borrowings, would exceed 70% of paid-in unimpaired capital and surplus. NCUA said doing so would give federally insured credit unions the power to develop policies for managing the shares within existing aggregate limits, allowing credit union boards to manage their funding sources and reliance on these funds with greater flexibility.
- Deleting a provision requiring federally insured credit unions (FICUs) with insurance above and beyond the federal insurance (known as “supplemental insurance,” issued by private insurance companies) give members a 30-day notification if it plans to end the supplemental coverage. NCUA wants to eliminate the 30-day notice, but keep the termination notification intact.
- Removing maximum borrowing authority that sets the requirements for obtaining and maintaining federal share insurance with the National Credit Union Share Insurance Fund (NCUSIF). This provision applies to all FICUs, NCUA said, and would eliminate the borrowing limit that now applies to state charted credit unions that are federally insured (FISCUs). Those credit unions would be subject to any applicable state law requirement, however. The statutory limit on federal credit union (FCU) borrowing would still apply, the agency said.
- Eliminating a requirement that FISCUs identify all non-member share or deposits on all required reports and notify all non-member account holders in writing that their accounts are not insured by the NCUSIF. NCUA indicated that wants to eliminate the obligation because it said it is duplicative of disclosures already required for the state credit unions as part of their agreement to hold federal savings insurance.
Comments on all four proposals will be due 60 days after publication in the Federal Register.
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