Six credit union deregulation proposals – including ones dealing with issues related to loan commissions and post-election training for new board members – are included in the sixth round of such offerings by the federal credit union regulator, issued Tuesday.
The National Credit Union Administration (NCUA) said the latest round of its deregulation push is an “ongoing review of NCUA’s regulations to ensure regulations are focused on credit unions’ safety, soundness, and resilience.” The agency started the project late last year in the wake of the Trump administration’s direction that federal agencies lighten their regulatory load.
Under the loan compensation proposal, the agency wants to add a definition to the existing regulation of “overall financial performance.” NCUA said the addition would clarify requirements related to credit union compensation plans that include incentives or bonuses related to lending metrics as part of overall financial performance.
The agency said it “also proposes to add the phrase ‘including a senior management employee’ to the exception on payments of an incentive or bonus to an employee based on overall financial performance.”
The board member education proposal, NCUA said, would remove the current requirement that a credit union director have or obtain expertise in finance and accounting within six months after appointment. “Removing this requirement reduces overall compliance burden on volunteer boards,” the agency said.
The remaining four proposals would:
- Revise requirements related to written purchase policies to say that the eligible obligations and notes of liquidating credit unions must comply with the purchasing credit union’s internal written policies. The proposal would also revise requirements related to the sale of eligible obligations “in a way that provides the credit union board of directors’ the authority to establish the limitations of their written sale policies.” Finally, it would remove from regulation a provision regarding payments and compensation because credit unions “are already governed by broader conflict of interest provisions in their bylaws and by the fiduciary duties of their officials.”
- Remove a provision on “refund of interest from loans” because NCUA said it is duplicative of the Federal Credit Union Act.
- Remove a provision authorizing credit unions to enter into contractual agreements but requires those deals to be in writing (the agency called the provision “superfluous”).
- Eliminate a definition under statutory liens of “except as otherwise provided by law or except as otherwise provided by federal law.” The agency said the definition was unnecessary and “makes the regulation easier to understand and reduces the compliance burden.”
Comments are due on all six proposals April 27.
NCUA Announces Sixth Round of Deregulation Proposals
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