Credit Union Trades Deliver Their Annual Regulatory Wish Lists
In the regulatory equivalent of telling Santa what you want for Christmas, the credit union trade associations have all written the NCUA recommending changes on everything from insurance rules to lending rules.
The recommendations are part of the agency's annual rule review, in which regulators examine about one-third of the existing rules and regulations.
NASCUS asked the agency to exempt state-chartered federally insured credit unions from obtaining permission from the NCUA before purchasing a participation interest in a loan that is originated at any bank or credit union. Currently, federal credit unions don't need to obtain permission but state-chartered ones do.
NASCUS Vice President Jenny Champagne also recommended that the agency consolidate all insurance rules in Part 741 of its rules.
Issues with the insurance rules were also raised by NAFCU and CUNA.
NAFCU urged the agency to calculate assessments using the average shares in a fiscal or calendar year rather than picking one specific date as a basis for calculation.
NAFCU Senior Counsel Carrie Hunt wrote that the change would "address the potential for inflated share figures."
CUNA Deputy General Counsel Mary Mitchell Dunn wrote that the agency should consider lowering the NCUSIF's normal operating level from 1.3% to 1.2%.
She also requested that credit unions be allowed to share in the gains if losses from the corporate credit unions' legacy assets are less than have been expensed so far. If the losses are greater than expected, future capital contributors shouldn't be liable for the losses, she said.
On member business loans, both groups are pushing for changes in loan-to-value requirements.
NAFCU requested that credit unions be allowed to issue loans at a higher LTV than 80% if they have demonstrated they have adequate capital and the ability to assess risks. The association also wants the general LTV requirement to be 80% for all member business loans. It is currently 75% on construction loans.
CUNA called for similar changes to the rules on LTV and urged the NCUA to clarify some of the existing rules on MBLs as well as providing "regulatory enhancements, appropriate for well-managed credit unions."
CUNA and NAFCU both urged the agency to expand the list of pre-approved activities for CUSOs.
CUNA didn't specify what activities should be included in the list but wrote that it should "encourage credit unions to utilize additional CUSO services that will add value to their members."
NAFCU urged the agency to add secured vehicle lending to the pre-approved list. It also requested that the NCUA keep in mind that indirect auto lending networks "are important to enable credit unions to be competitive in a particular market."