Comments Suggest Tweaks to NCUA's MDI Proposal
Comment letters responding to an NCUA proposal to create a Dodd-Frank mandated Minority Depository Institution preservation program generally support the effort, but some question the costs and need to create a new program. On July 25, the NCUA issued an interpretive ruling and policy statement on the topic; comments were due Sept. 30.
According to the proposal, the MDI program would be administered by NCUA’s Office of Minority and Women Inclusion and would consist of outreach efforts, technical assistance and educational opportunities. Credit unions with 50% or more minority members and management would be eligible and would also have access to the NCUA’s Office of Small Credit Union Initiatives’ resources and grant programs.
The African-American Credit Union Coalition said it unequivocally supports the proposal and it is hopeful that the MDI will be fully funded to achieve the goals of the Financial Institutions Reform, Recovery and Enforcement Act, wrote AACUC Chair Lynette Smith and Vice Chair Mark Brantley.
The AACUC said it also encouraged the NCUA’s OMWI to collaborate, if it hasn’t already, with the original FIRREA regulatory counterparts for ideas that have been successfully implemented.
The League of Southeastern Credit Unions & Affiliates, which represents 280 credit unions in Alabama and Florida, said it had some concerns about the program’s potential application and unintended consequences.
“LSCU supports the proposed IRPS goal of working to preserve the present number of MDIs. While noble in its aim, we are not sure this will be possible given the economic challenges facing financial institutions,” wrote Scott Morris, director of regulatory advocacy, in his Sept. 30 comment letter.
Morris added, “Rather than holding to a static number of MDIs, growth within the credit union industry of MDIs for the benefit of the communities they serve and for participating account holders would seem to offer greater opportunity for success.”
In her comment letter, NASCUS Legal Policy Counsel Sabrina Cotter also addressed the merger issue, urging the NCUA to work closely with state regulators to ensure MDI guidelines are applied when considering potential merger partners for troubled state-chartered institutions.
In its Sept. 30 comment letter, CUNA said while it supports preserving minority credit unions, the NCUA should have provided a cost and benefit analysis.
“These objectives are certainly commendable, but while a separate program may be desirable to achieve these goals, the agency has not provided an analysis comparing the costs of such a program to implementing its responsibilities through other programs that already exist,” wrote Mary Mitchell Dunn, CUNA deputy general counsel and senior vice president.
The National Federation of Community Development Credit Unions urged the NCUA to adopt a game plan that would combine resources with supervisory authority to help turn around challenged institutions, wrote Board Chair Deyanira Del Rio and Cathleen Mahon, president/CEO.
The Federation recommended the NCUA develop criteria and goals that would strengthen the net worth of minority credit unions, and also convert the Community Development Revolving Loan Fund so that secondary capital could be made available to minority credit unions.
“(Some) institutions are simply not operating at the capacity required to keep up with an increasingly complex financial service environment and corresponding compliance challenges,” Del Rio and Mahon wrote. “But that should not automatically result in the loss of a charter and service to a community who needs credit union services.”