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ALEXANDRIA, Va.- NCUA General Counsel Bob Fenner explained, in a Jan. 23, 2003 legal opinion letter, that NCUA plans to remove outdated reserving provisions from the member business lending rule at its March board meeting. In response to a letter NCUA received from FIG Federal Credit Union President and CEO Mark Herter of Los Angeles-which advocated the inclusion of a borrower’s ability to repay, the collectibility of the loan, and the disposition of collateral in determining reserves-Fenner wrote that the NCUA Board was expected to remove those provisions. Additionally, he said that NCUA’s recent Interpretive Ruling and Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Federally-Insured Credit Unions (IRPS 02-3) supercedes those regulatory provisions and provides guidance on ALLL methodologies and supporting documentation procedures consistent with generally accepted accounting principles. “Unlike the MBL rule, IRPS 02-3 recognizes that FICUs should adopt methodologies and documentation practices appropriate for their size and complexity and allows them to consider the value of collateral in determining the appropriate loss reserve,” Fenner wrote.

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