CUSOs Likely to See Final Rule Midyear
After receiving more than 280 comment letters on the matter, credit unions may see a final amended CUSO proposal by midyear.
Katherine Weber, founder of the Weber Firm LLC, a Pennsylvania law firm that represents CUSOs and credit unions, shared that update at a March 7 NAFCU webinar on preparing for the heightened scrutiny of CUSOs.
Weber said the pressure on the NCUA to adopt changes to the CUSO rule stems from concerns over systemic risk and protecting the National Credit Union Share Insurance Fund, among other issues. She said she does not believe the proposal will be completely withdrawn as some in the industry have called for.
The NCUA has indicated there will be a distinction made between those CUSOs offering what it describes as risky products and services and those primarily providing operational support to credit unions, Weber said. At this point, the regulator has not said which services would be considered risky, she added.
“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,” Antonini wrote shortly after the NCUA issued its proposal last year. “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.”
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.