NCUA Board Proposes Expanding CUSO Rules, Clarification of FOIA
ALEXANDRIA, Va. -- The NCUA Board got down to business last week, approving the first of its proposals from the Outreach Task Force as well as proposing expansion of the rules governing credit union service organizations and clarification of the Freedom of Information Act regulation, among other things.
The NCUA Board moved a proposed regulation to expand several different CUSO activities. It would add credit card loan origination and payroll processing as permissible CUSO activities. It would also expand the scope of two the categories of services, allowing for services to includes persons eligible for credit union members.
The legislative history of the Financial Services Regulatory Relief Act, NCUA's Board Action Memorandum contended, "indicates that Congress intended to allow FCUs 'to sell negotiable checks, money orders and other similar transfer instruments, including international and domestic electronic fund transfers, to anyone eligible for membership, regardless of their membership status.' The board believes the enactment of that law warrants a parallel expansion in the CUSO rule, since an FCU may elect to provide some or all of these types of services through the vehicle of a CUSO."
NCUA staff also recommended, and the board accepted, proposing a rule to update and clarify the procedures for requesting access to agency records and other information under FOIA. It incorporates updates from the Openness Promotes Effectiveness in the National Government Act of 2007. Even though the new FOIA requirements do not become effective until Dec. 21, 2008, NCUA is taking the opportunity during its regular review of the regulations to update the rules.
The proposal would also impose limits on the ability of credit unions to recapitalize CUSOs in certain circumstances when they are insolvent. NCUA is also seeking comment on whether to revise and extend agency access to books and records and corporate separateness provisions in the rule to federally insured, state-chartered credit unions.
In the proposal, NCUA is also looking to clarify that CUSOS may buy and sell participations of loans that they are currently allowed to originate. NCUA is also proposing to delete the section regarding amendment requests as unnecessary.
In the presentation of the quarterly insurance fund report, the board and participants were informed that the NCUSIF equity ratio increased in March to 1.31% based upon an adjusted insured share base of $565.5 billion as of year-end 2007; it is expected to hit 1.29% by year-end 2008. Insurance losses were down $3.8 million, primarily due to a decrease in reserves for specific credit unions. Net income reached $61.3 million, well above the budget $39.9 million.
Problem credit unions are up slightly to 229, accounting for 1.59% of insured shares.
The NCUA Board approved a notice of proposed rulemaking that would revise the definition of low-income members to use the median family income versus the current median household income definition. The proposal is aimed at eliminating confusion created by adjusting the MHI in high-cost metropolitan areas. It will align the definition with NCUA's low-income designation criteria and Community Development Financial Institution certification.
NCUA has also proposed revising its rule governing the requirements for use of the official insurance sign and official advertising statement to permit credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements.
At press time, several items were remained up for consideration in the closed board meeting.