NACUSO Keeps Heat on Proposed CUSO Regs
The National Association of Credit Union Service Organizations has raised several new questions about the NCUA’s proposed new CUSO regulations.
In late July, the agency proposed a rule that would require all CUSOs to file financial reports directly with the NCUA and the appropriate state supervisory authority. The board also proposed limiting federally insured, state-chartered credit unions’ aggregate cash outlays to a CUSO.
In a comment letter today, NACUSO questioned the definition of a “subsidiary.” Under NCUA’s proposal, all requirements in the CUSO rule would also apply to subsidiary CUSOs.
NACUSO asked if a CUSO has to have controlling interest in a company or does a 1% ownership in a company make the company a subsidiary.
“The informal rule has been that if there is an intent that a subsidiary of a CUSO was formed for the purpose of evading the CUSO rule, that would not be allowed. We ask that this continue to be the rule as there may be very good business reasons for a CUSO to invest in a company that is not a CUSO,” the letter said.
NACUSO also sought clarification on what is meant by “aggregate cash outlay on a cumulative basis,” questioning if this is reduced by dividends received by the credit union from a CUSO investment.
The group said it was also unclear how far back this cumulative calculation would go.
“What if a credit union invested in a CUSO and has written the investment off 10 years ago, does that count,” the letter asked. “How do investments in other CUSOs figure in to the analysis? What is the procedure to obtain NCUA approval to make additional investments? What are the standards of review that NCUA will use? Is there a time period in which NCUA must respond to a request or can the request go unanswered, effectively denying the request?”
NACUSO said because of the uncertainties, the proposal gives “the impression that it has not been completely analyzed as to its impact and [is] in need of significant clarification.”