ARLINGTON, Va. - Stressing that it is an issue of credit unions being competitive with uninsured financial service providers, and not a federal vs. state-charter issue, NASCUS is urging NCUA allow federally insured state-chartered credit unions to accept uninsured deposits and shares, if state law permits. Commenting on NCUA's proposed changes to share insurance regulations regarding living trusts, joint revocable trusts, IRA accounts, public accounts, guardian accounts and the application of local law to share insurance determinators as well as on revisions to the appendix to Part 745, NASCUS recognizes that the proposed revisions are meant to maintain parity between NCUA's insurance program and the Federal Deposit Insurance Corporation (FDIC) rules. "That is a reasonable goal, except that, unlike banks, many state-chartered credit unions are empowered to accept deposits as well as shares, and state credit union laws and regulations may allow those credit unions to opt not to insure the deposits," wrote Doug Duerr, president, NASCUS. "Today's credit unions are competing not only with insured financial service providers for their members' services, but increasingly with uninsured ones," Duerr told Credit Union Times. "It's difficult for credit unions to compete with these types of providers if they're not on common ground." Duerr accused NCUA of "taking an archaic position" on the issue. He emphasized that the issue is one of interest to all credit unions in the industry and that "the present rule has the effect of preempting a State's right to allow its credit union to offer a class of uninsured deposits." NASCUS further argues that such a move by NCUA would be inconsistent with Executive Order 13132 which limits federal preemption of state law "to the minimum level necessary to achieve the objective of the statute..." It further directs the federal agency whenever it "foresees the possibility of a conflict between state law and federally protected interest within its area of regulatory responsibility, the agency shall consult, to the extent practicable, with appropriate state and local officials..." NASCUS also urged NCUA to solicit comments on amending the insurance regulations and the insurance contract to allow federally insured credit unions to offer members a class of uninsured shared. In a July 15, 1999-comment letter to NCUA, NASCUS expressed its concern that "NCUA insurance regulations and the insurance contract would have to be amended" to allow federal insured credit unions to accept uninsured deposits or shares, if state credit union laws and regulations allow. Duerr said NCUA has not addressed those issues and NASCUS' points, as evidenced by NCUA's proposed rule. "NCUA is obligated to listen to NASCUS' comments on this issue because of Executive Order 13132," said Mary Martha Fortney, vice president accreditation and government relations for NASCUS. "A few years ago, members would have been reluctant to put their money in an uninsured account. Today, that has to be explored as a viable option," said Duerr. -
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